It has been about a month since the last earnings report for The Charles Schwab Corporation (SCHW). Shares have lost about 9.8% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Charles Schwab due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important catalysts.
Schwab's Q4 Earnings Beat Estimates on Trading & NIR
Schwab’s fourth-quarter 2025 adjusted earnings of $1.39 per share beat the Zacks Consensus Estimate of $1.37. The bottom line soared 38% year over year.
Quarterly results benefited from the robust performance of the asset management business and an increase in trading revenues. Higher NIR and solid brokerage account numbers were other positives. However, an increase in expenses was the undermining factor.
Results excluded transaction-related costs. After considering these, net income (GAAP basis) was $2.46 billion or $1.33 per share, up from $1.84 billion or 94 cents per share in the year-ago quarter.
For 2025, adjusted earnings per share of $4.87 surpassed the consensus estimate of $4.84 and grew 50% year over year. Net income (GAAP) jumped 49% to $8.85 billion.
Revenues Jump, Expenses Rise
Quarterly net revenues were a record $6.33 billion, jumping 19% year over year. The increase was driven by higher NIR (up 25%), trading revenue (22%) and asset management and administration fees (15%). The top line handily surpassed the Zacks Consensus Estimate of $6.3 billion.
For 2025, net revenues surged 22% to $23.92 billion. The top line also outpaced the Zacks Consensus Estimate of $23.87 billion.
Total non-interest expenses (GAAP basis) increased 4% to $3.16 billion. Excluding non-recurring items, adjusted total expenses were $3.03 billion, up 6% year over year.
The pre-tax profit margin increased to 50.2% from 43.3% in the prior-year quarter.
At the end of the fourth quarter, Charles Schwab’s average interest-earning assets rose 1% to $431.1 billion.
As of Dec. 31, 2025, the annualized return on equity was 22%, up from 18% in the prior-year quarter.
Other Business Metrics
As of Dec. 31, 2025, Schwab’s total client assets reached a record $11.9 trillion (up 18% year over year). During the reported quarter, net new assets brought by new and existing clients were $158.2 billion.
Schwab added 1.27 million new brokerage accounts during the quarter. As of Dec. 31, 2025, the company had 38.5 million active brokerage accounts, 2.2 million banking accounts and 5.7 million corporate retirement plan participants.
Share Repurchase Update
During the reported quarter, Schwab repurchased 29.2 million shares for $2.7 billion.
2026 Outlook (Excludes the Forge Global Deal)
Management assumes the Federal Reserve will lower interest rates to 3.25% by the end of this year, equity market returns will be almost 6.5%, daily average trades will be approximately 7.4 million and organic asset growth of around 5%.
Schwab anticipates revenues to grow in the range of 9.5-10.5% as demand for its services and solutions continues to rise.
Management expects NIM to be between 2.85% and 2.95%, with the fourth quarter in the low 290s range. The company expects average interest-earning assets to grow modestly following the paydown of supplemental borrowings at the bank.
Adjusted expenses are anticipated to rise approximately 5.5-6.5% as the company continues to prioritize growth (branch expansion, hire more financial consultants and wealth advisers, and expand digital assets offerings) and scale investments (advertising and marketing and incorporating AI across its service and technology areas).
The company expects the adjusted pre-tax margin to be in the low 50% range.
The company expects adjusted earnings to be in the band of $5.70-$5.80 per share, representing growth in the upper teens on a year-over-year basis.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a upward trend in fresh estimates.
VGM Scores
Currently, Charles Schwab has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Charting a somewhat similar path, the stock has a grade of B on the value side, putting it in the top 40% for value investors.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Charles Schwab has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Charles Schwab is part of the Zacks Financial - Investment Bank industry. Over the past month, JPMorgan Chase & Co. (JPM), a stock from the same industry, has gained 1.5%. The company reported its results for the quarter ended December 2025 more than a month ago.
JPMorgan Chase & Co. reported revenues of $45.8 billion in the last reported quarter, representing a year-over-year change of +7.1%. EPS of $5.23 for the same period compares with $4.81 a year ago.
JPMorgan Chase & Co. is expected to post earnings of $5.28 per share for the current quarter, representing a year-over-year change of +4.1%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.4%.
JPMorgan Chase & Co. has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.
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The Charles Schwab Corporation (SCHW): Free Stock Analysis Report JPMorgan Chase & Co. (JPM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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