|
|
|
|
|||||
|
|
|
Two key online brokerage firms, Interactive Brokers Group IBKR and Charles Schwab SCHW, both offering broad retail and institutional trading services, cater to distinct segments of the market. While IBKR is known for its sophisticated trading platform, global market access and ultra-low execution costs, Schwab emphasizes accessibility, ease of use and an integrated wealth-management experience.
Since the beginning of this year, both firms have been benefiting from heightened market volatility and increased retail investor participation. As their trading revenues continue to rise, investors are bullish on their near-term growth prospects amid a favorable backdrop.
Year to date, shares of Schwab have gained 24.1% and Interactive Brokers stock has rallied 45.4%. Both stocks have fared better than the Zacks Finance sector and the S&P 500 Index in the mentioned time frame. While IBKR has outperformed the industry, SCHW’s performance has been below the industry average.
Now, the question arises: which brokerage stock — Schwab or Interactive Brokers — is better placed for long-term growth? Let us break down their fundamentals, financial performance and more before taking any decision.
Interactive Brokers’ technological superiority remains one of its strongest aspects. The company processes trades in stocks, futures, options and forex on more than 160 exchanges across several countries and currencies.
Superior technology usage has kept IBKR’s compensation expenses relative to net revenues (10.4% in the first nine months of 2025) below its industry peers. Further, the company has been emphasizing developing proprietary software to automate broker-dealer functions, leading to a steady rise in revenues.
The company’s technological superiority, combined with easier regulations to improve product velocity, will support its net revenues through higher client acquisitions. Net revenues are expected to strengthen further in the quarters ahead, given solid Daily Average Revenue Trades (DARTs) numbers and a robust trading backdrop, driven by higher market participation.
Interactive Brokers is expanding globally with a series of strategic moves. In October 2025, the company launched the Karta Visa card for its clients to make purchases globally with a card linked to their IBKR account, while in August, it introduced Connections, a feature designed to help investors discover trading opportunities and evaluate investments by highlighting related ideas across global markets. Also, it launched zero-commission U.S. stock trading in Singapore and NISA accounts to help Japanese investors build wealth tax-free. In May, it extended the trading hours for Forecast Contracts to nearly 24 hours a day, while in April, it launched the prediction markets hub in Canada.
Further, the company has expanded its offerings with Plan d’Epargne en Actions accounts for French clients and the IBKR GlobalTrader app for global stock trading. It also pioneered nearly 24-hour overnight Trading on U.S. stocks and ETFs, launched commission-free IBKR Lite and introduced the Impact Dashboard for sustainable investing. These initiatives are expected to strengthen Interactive Brokers’ market share amid stiff competition and help diversify operations.
With $11.59 trillion in total client assets (as of Sept. 30, 2025) and a dominant position in both retail brokerage and advisor custody, Schwab benefits from deep client relationships and recurring revenue streams. Its acquisition of TD Ameritrade (“TDA”) in 2020 solidified its leadership among retail and institutional investors.
Thus, at a time when the majority of the wealth management industry is focusing more on digital-first solutions, Schwab is doubling down on its physical presence, with plans to open 16 new branches, expand 25 existing ones and hire more than 400 branch-related roles.
A key strength of SCHW is its diversified revenue base, which includes net interest income (NII), asset management fees and advisory services fees. Higher interest rates have significantly boosted the company’s net interest margin (NIM). Its continued focus on repaying high-cost bank supplemental funding balances will further drive NIM in the near term. By September 2025-end, the bank's supplemental funding balance was down 85% to $14.8 billion from the peak of $97.1 billion recorded in May 2023.
Schwab’s registered investment advisor (RIA) custody business is one of the largest in the United States, and the demand for independent advisors continues to grow. The integration of TDA enhanced the company’s ability to scale and serve this high-margin segment.
SCHW has been quietly modernizing its platform to appeal to younger investors, with improved digital tools and plans to launch spot Bitcoin and Ethereum trading by mid-2026. This move aligns with changing investor behavior, as clients seek diversification. The company’s scale and trusted platform position it well to serve as a bridge between traditional finance and digital assets, especially as cryptocurrency adoption becomes increasingly mainstream.
The Zacks Consensus Estimate for Schwab’s 2025 earnings is pegged at $4.80 per share, which indicates year-over-year growth of 47.7%. Earnings estimates for 2026 of $5.56 indicate 15.8% growth. Over the past 30 days, estimates for both 2025 and 2026 have been revised upward.
In contrast, the consensus estimate for IBKR’s 2025 earnings is $2.06 per share, which indicates 17.1% year-over-year growth. For 2026, the earnings estimate is $2.23, which implies growth of 8.1%. Earnings estimates for 2025 and 2026 have been revised higher over the past 30 days.
Valuation-wise, SCHW is currently trading at a 12-month forward price-to-earnings (P/E) of 16.72X. IBKR stock, conversely, is trading at a P/E (F12M) of 29.03X.
While both stocks are trading at a premium to the industry average of 14.26X, Schwab stock is relatively inexpensive compared with Interactive Brokers.
SCHW’s return on equity (ROE) of 21.02% is way above IBKR’s 5.03%. This reflects that Schwab uses shareholder funds more efficiently to generate profits than Interactive Brokers.
Interactive Brokers remains a dominant, tech-driven brokerage, favored by active traders, hedge funds and quantitative investors. Its global reach, low-cost model and powerful trading tools continue to support consistent revenue growth.
Likewise, Schwab leverages its massive asset base, stable earnings and trusted platform to deliver long-term value. Schwab offers a balanced blend of scale, profitability and strategic adaptability without compromising its conservative approach. It offers a compelling mix of reliability and growth potential in an evolving financial landscape.
Although IBKR has a lower ROE and a premium valuation than Schwab, it remains a stable, well-run business supported by its strong technological capabilities and diversified product offerings.
Thus, for valuation-aware and more conservative investors, it is advisable to maintain caution and look for any signs of slowing growth. But, for those focused on long-term potential, Interactive Brokers looks like a better investment option now as the company’s higher valuation reflects durable advantages and growth, not just investor enthusiasm.
At present, Interactive Brokers carries a Zacks Rank #2 (Buy) whereas Schwab has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
This article originally published on Zacks Investment Research (zacks.com).
| 5 hours | |
| 6 hours | |
| Nov-26 | |
| Nov-26 | |
| Nov-26 | |
| Nov-25 | |
| Nov-25 | |
| Nov-24 | |
| Nov-24 | |
| Nov-24 | |
| Nov-24 | |
| Nov-24 | |
| Nov-24 | |
| Nov-24 | |
| Nov-24 |
Join thousands of traders who make more informed decisions with our premium features. Real-time quotes, advanced visualizations, backtesting, and much more.
Learn more about FINVIZ*Elite