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Charles Schwab SCHW is slated to report fourth-quarter and 2025 results on Jan. 21, before market open. The company’s quarterly earnings and revenues are expected to have increased on a year-over-year basis.
Schwab’s third-quarter 2025 earnings outpaced the Zacks Consensus Estimate. Results benefited from solid performance of the asset management business and higher trading revenues. Higher net interest revenues (NIR) and solid brokerage account numbers were other positives.
The company has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average beat being 6.6%.
The Charles Schwab Corporation price-eps-surprise | The Charles Schwab Corporation Quote
Before we take a look at what our quantitative model predicts, let us check the factors that are likely to have impacted Schwab’s fourth-quarter performance.
Trading Revenues: Client activity and market volatility were solid in the fourth quarter. Major factors that impacted trading business in the quarter included the longest U.S. government shutdown in history, a dip in consumer sentiment, easing monetary policy and a dominant AI-theme. In October and November, SCHW’s core net new assets witnessed strong year-over-year growth. Further, the number of new brokerage accounts opened grew in the first two months of the quarter.
Thus, Schwab is expected to have witnessed a rise in trading revenues in the to-be-reported quarter. The Zacks Consensus Estimate for trading revenues is pegged at $1.03 billion, which suggests a 17.6% increase from the prior-year quarter.
NIR: The consensus estimate for SCHW’s average interest-earning assets for the to-be-reported quarter is $434 billion, indicating a year-over-year rise of 1.9%.
In the quarter, the Fed lowered interest rates twice, which, along with the September rate cut, lowered interest rates to 3.50-3.75%. While this is likely to have hurt SCHW’s NIR and net interest margin (NIM) to some extent, a solid lending scenario and stabilizing funding/deposit costs are expected to have offered the much-needed support.
The company’s continued focus on repaying high-cost bank supplemental funding balances is expected to have further supported growth.
The Zacks Consensus Estimate for NIR is pegged at $3.13 billion, indicating a rally of 23.7% from the prior-year quarter’s actual.
Management expects fourth-quarter NIM to expand toward the 2.80% level.
Asset Management & Administration Fees: Led by robust equity market performance, Schwab is likely to have recorded a rise in asset management and administration fees. In October and November, Schwab’s client assets receiving ongoing advisory services grew from the prior-year periods. The consensus estimate for asset management and administration fees for the to-be-reported quarter is pegged at $1.70 billion, which implies year-over-year growth of 12.5%.
Expenses: Schwab’s operating expenses have been elevated in the past few quarters. Due to persistent regulatory spending and strategic acquisitions, marketing and advertising, and efforts to enhance business efficiency, expenses are likely to have increased in the to-be-reported quarter. Also, the company’s plan to expand its branch network and hire for branch-related positions is expected to have led to higher expenses.
Management expects expenses for 2025 to rise 5.25% or a little higher.
In November, Schwab announced an agreement to acquire Forge Global Holdings, Inc. for $660 million in cash. The deal is expected to be completed in the first half of 2026, subject to customary closing conditions.
Per the agreement, Schwab will pay $45 per share in cash for each share of Forge Global.
Following the close, Schwab will begin offering Forge Global’s products to select ultra-high-net-worth clients, introduce ’40 Act funds to broaden private-market access and continue enhancing the integrated platform. In the near term, the company plans to extend access to more than 1 million retail clients and registered investment advisers, with further expansion to all qualified investors and enhanced stock-plan and proprietary solutions over the medium term.
The move aligns with Schwab’s strategy to offer private market capabilities to retail and advisor clients, leveraging its comprehensive suite of wealth, advisory and investment management solutions, to address the complex needs of investors.
According to our quantitative model, the chances of Schwab beating the Zacks Consensus Estimate for earnings this time are high. This is because it has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better.
You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Schwab is +4.81%.
Zacks Rank: The company currently carries a Zacks Rank #3.
In the past seven days, the Zacks Consensus Estimate for fourth-quarter earnings has been unchanged at $1.34 per share. The estimate indicates a 32.7% rise from the year-ago quarter.
For 2025, the earnings estimate is pegged at $4.83, indicating a year-over-year rise of 48.6%.
The consensus estimate for quarterly sales is pegged at $6.24 billion, which suggests a 17.2% jump from the prior-year quarter. The full-year sales estimate of $23.83 billion indicates a rise of 21.5%.
Here are a couple of finance stocks that you may want to consider, as these too have the right combination of elements to post an earnings beat in their upcoming releases, per our model:
Truist Financial TFC is scheduled to announce fourth-quarter 2025 results on Jan. 21. The company carries a Zacks Rank #3 at present and has an Earnings ESP of +0.88%.
Quarterly earnings estimates for Truist have been unchanged at $1.09 per share over the past week.
The Earnings ESP for Regions Financial RF is +0.36% and it carries a Zacks Rank #2 (Buy) at present. The company is slated to report fourth-quarter 2025 results on Jan. 16. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Over the past seven days, the Zacks Consensus Estimate for Regions Financial’s quarterly earnings has been unchanged at 61 cents per share.
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This article originally published on Zacks Investment Research (zacks.com).
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