Shares of Charles Schwab (SCHW) are modestly lower after the company reported second quarter results that were largely in-line with expectations.
The Charles Schwab Corporation announced net income for the third quarter of 2018 was a record $923 million, up 7% from $866 million for the prior quarter, and up 49% from $618 million for the third quarter of 2017. EPS grew 55% to $0.65, in-line with estimates. Net revenue grew 19% to $2.58 billion while pre-tax margin grew 370 basis points 47.3% .
Chief Executive Walt Bettinger said, "Clients opened 369,000 brokerage accounts in the third quarter, bringing our year-to-date new accounts to 1.2 million -- the highest nine-month total in our history. The company is growing through both our Retail channel and the registered investment advisors who custody on our platform. Households new to Retail rose 24% for the first nine months of 2018 compared to last year, with 53% of those new clients under the age of 40. Additionally, Advisor Services attracted 173 RIA teams to Schwab thus far in the year, a pace that beats all pre-2017 annual totals. Each of our two primary businesses helped propel total company core net new assets to $53.5 billion, a third quarter record. We've generated $172.5 billion in core net new assets year-to-date -- also surpassing all full-year totals prior to 2017. Client trading activity provided further evidence of ongoing engagement during the summer months. Against a backdrop of relatively stable markets, daily average trades reached 683,000, consistent with the second quarter and a third quarter record...
Since 2008, we have increased brokerage accounts over 50% and tripled our client asset base, all while driving down our ratio of expenses to client assets by a third -- a notable accomplishment for a U.S. investment services firm of our size, especially without any substantial acquisitions. And we are not letting up: the company has attracted at least two dollars in inflows for every dollar transferred to a competitor for six consecutive quarters and our third quarter core net new assets represented a 7% annualized organic growth rate, outpacing our 6% average over the past 10 years."
Schwab has a $66 billion valuation and trades at just under 20x EPS, a notable premium to both TD Ameritrade (AMTD) and E*TRADE (ETFC).