Schwab Reaps as Individuals Sow
Traditional brokerages have been winning the stock tug-of-war with their discount online counterparts, as the former’s shares have surged in the last two weeks. But a gleeful earnings preview from Charles Schwab Corp. set off a rally Monday that could help shift the momentum back to the relative upstarts.
Schwab said its first-quarter profit will exceed analysts’ estimates by as much as 30%, doubling year-earlier income, as trading of stocks by customers burst through previous records.
Schwab stock rose $3.94 to a record $87.94, the biggest gain in more than a week. Shares of other online securities firms also rose.
E-Trade Group Inc., the No. 3 online broker, gained $3.31 to $54.13; Ameritrade Holding Corp., the sixth-largest, climbed $2.19 to $51.69; and Knight/Trimark Group Inc., the biggest Nasdaq market maker, advanced $3.69 to $58.50.
Merrill Lynch & Co., which has led the recent surge among the full-service group, also rallied, gaining $4.44 to $91.69.
Schwab, whose market value now tops that of Merrill Lynch, said it will earn $130 million to $140 million, or 31 cents to 34 cents a share in the quarter, exceeding a 26-cents-a-share average of seven analysts polled by First Call Corp. The company earned $68 million, or 16 cents a share, in the year-earlier period.
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Brokerage Wars
Investors’ fascination with online brokerage stocks has waned in recent weeks after exploding in January. Instead, stocks of mainstream Wall Street firms have overall been bigger market gainers since Feb. 26. But Charles Schwab’s bullish advisory Monday about its first-quarter earnings spurred new interest in the rest of the online firms. A look at some key stocks in the two groups:
TRADITIONAL BROKERAGES
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52-wk. Mon. close Gain since Stock (ticker symbol) high* and change Feb. 26 Merrill Lynch (MER) $109.13 $91.69, +$4.44 +19.5% DLJ Securities (DLJ) 64.13 67.25, +3.25 +18.0 Bear Stearns (BSC) 60.94 48.94, +2.19 +14.3 Lehman Bros. (LEH) 85.00 60.44, +1.81 +14.0 Morgan Stanley (MWD) 103.19 102.00, +0.88 +12.7 PaineWebber (PWJ) 53.38 39.88, +1.06 +6.7
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DISCOUNT/ONLINE BROKERAGES
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52-wk. Mon. close Gain since Stock (ticker symbol) high* and change Feb. 26 Charles Schwab (SCH) 85.00 87.94, +3.94 +17.9 E-Trade (EGRP) 66.44 54.13, +3.31 +17.7 Ameritrade (AMTD) 67.50 51.69, +2.19 +6.0 Natl. Disc. Brok. (NDB) 47.00 26.63, +2.88 +2.9 Siebert Finl. (SIEB) 70.63 25.88, +1.13 -7.8 J.B. Oxford (JBOH) 25.75 8.56, +0.13 -14.9
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* Does not include Monday’s trading
Sources: Times research, Bloomberg News
