The Charles Schwab Corporation (SCHW): A Bull Case Theory

We came across a bullish thesis on The Charles Schwab Corporation on The Diversified Fins Analyst’s Substack by Collin Cook. In this article, we will summarize the bulls’ thesis on SCHW. The Charles Schwab Corporation's share was trading at $103.88 as of February 4th. SCHW’s trailing and forward P/E were 22.31 and 17.79 respectively according to Yahoo Finance.

The Charles Schwab Corporation, together with its subsidiaries, operates as a savings and loan holding company that provides wealth management, securities brokerage, banking, asset management, custody, and financial advisory services in the United States and internationally. SCHW delivered a solid fourth-quarter performance, posting record revenue of $6.34 billion, up 19% year-over-year, driven by strong net interest income, which rose 25% Y/Y to $3.17 billion, and trading revenue growth of 22% Y/Y.

Asset management fees also grew 15% Y/Y to $1.73 billion, supporting pre-tax margins of 52.2%, up 560 basis points from the prior year. Adjusted EPS came in at $1.39, inline with expectations, as the company repurchased $2.7 billion of shares, highlighting its capital return discipline. Key operating metrics were robust, with total client assets reaching a record $11.9 trillion, client accounts increasing 6% Y/Y to 46.5 million, and annualized net new asset growth accelerating to 5.7%, the highest pace since early 2023.

Net interest margin remained stable at 2.90%, with average interest-earning assets up 3% sequentially, demonstrating resilience in a moderating interest rate environment. Looking ahead, SCHW expects 2026 revenue growth of 9.5%–10.5% and expense growth of 5.5%–6.5%, implying adjusted EPS between $5.70 and $5.80, supported by continued net new asset inflows, expanding client engagement, and disciplined capital allocation.

Strategic initiatives, including the Forge and Qapita acquisitions, aim to enhance private market access and strengthen SCHW’s ecosystem for retail and RIA clients, positioning the company to capture long-term growth opportunities. With a diversified revenue base, record client assets, and a growing share repurchase program, SCHW presents a compelling bullish case, offering a combination of resilient earnings, high-quality asset growth, and attractive shareholder returns in a competitive wealth management landscape.

Previously, we covered a bullish thesis on Morningstar, Inc. (MORN) by Flyover Stocks in May 2025, which highlighted its strong moat in Data & Analytics and steady growth. MORN’s stock price has depreciated by approximately 40.64% since our coverage. Collin Cook shares a similar bullish view on The Charles Schwab Corporation (SCHW) but emphasizes record revenue, rising client assets, and disciplined capital allocation.

The Charles Schwab Corporation is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 99 hedge fund portfolios held SCHW at the end of the third quarter which was 100 in the previous quarter. While we acknowledge the risk and potential of SCHW as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SCHW and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.