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Non-Tech : Charles Schwab (SCH) -- A tech-stock profile? -- Ignore unavailable to you. Want to Upgrade?

To: Typhoon who wrote (893)	10/2/1999 11:33:00 PM
From: puborectalis	Read Replies (1) \| Respond to of 1390

Buying Opportunity in Brokerage Stocks? 09-23-99 3:50 PM by Alyssa Sibley \| As recent quarterly profits confirm, brokerage companies are experiencing explosive growth. However, the stocks remain under pressure due to concerns over higher interest rates. Goldman Sachs GS, Morgan Stanley Dean Witter MWD, and Lehman Brothers LEH are all approximately 20% or so off their highs reached back in April of this year. While Morgan Stanley and Lehman Brothers are outperforming their peers and the market on a year to date basis, Goldman Sachs continues to be the laggard of the group. Third-quarter earnings, however, attest to the ability of brokerage firms to compete in an increasingly uncertain financial-market environment. In its first full quarter as a public company, Goldman Sachs reported third quarter earnings of $1.31 per share, well ahead of the consensus estimate of $1.09. Profits rocketed 94% over third quarter 1998, which was universally depressed due to last summer's global financial markets meltdown. Management cited Goldman's involvement in seven out of the ten largest international mergers in the fiscal third quarter as well as its leading underwriting role in the recent spate of initial public offerings. Morgan Stanley Dean Witter reported third-quarter earnings of $1.65 versus the consensus estimate of $1.63. Profits increased 55% over third quarter 1998, facilitated by a resurgence in investment-banking revenues and strong results from its European operation. Morgan Stanley continues to benefit from its diverse business mix ranging from credit cards to investment banking. Lehman Brothers reported third-quarter earnings of $2.20 versus the consensus estimate of $1.99. Profits surged 92% over third quarter 1998. The company, like its peers, was aided by the comeback in global markets. Management attributed the strength to continued expansion of high-margin business segments as well as an upturn in its international operations. These early-bird earnings announcements are typically a good indicator for the outlook of the remaining brokerage houses. However, financial markets look more and more uncertain going into the fourth quarter as interest-rate fears loom persistently on the horizon. For longer-term investors, now may be a good time to invest, as the stocks are significantly off their highs. Then again, in the near term, don't be surprised to see the stocks continue to trade in a volatile pattern until interest-rate fears ease. P o s t e d 0 9 - 2 3 - 1 9 9 9 Alyssa Sibley is an editorial analyst with Morningstar. She can be reached at alyssa.sibley@morningstar.com