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The Charles Schwab Corporation revolutionizes how millions manage and grow their wealth, blending cutting-edge technology with personalized financial services. As a dominant force in capital markets, Schwab excels in retail brokerage, asset management, and advisory solutions, earning a reputation for innovation and reliability. With a vast network and diverse offerings, it stands at the crossroads of tradition and modern finance. But does its current valuation fully capture its growth potential in an evolving financial landscape?
Table of contents
Business Model & Company Overview
The Charles Schwab Corporation, founded in 1971 and headquartered in Westlake, Texas, stands as a dominant player in financial services. Its ecosystem integrates wealth management, securities brokerage, banking, and asset management, delivering a seamless experience across retail and advisor segments. With approximately 40K employees and a presence spanning the US, Puerto Rico, UK, Hong Kong, and Singapore, Schwab crafts a comprehensive financial platform tailored to diverse investor needs.
Schwab’s revenue engine balances robust retail brokerage and advisory services with recurring banking and asset management fees. The Investor Services segment drives volume through brokerage and retirement plan offerings, while Advisor Services expands value via custodial and trading services globally across the Americas, Europe, and Asia. This competitive advantage fortifies Schwab’s economic moat, positioning it as a key architect in shaping the capital markets landscape.
Financial Performance & Fundamental Metrics
In this section, I analyze The Charles Schwab Corporation’s income statement, key financial ratios, and dividend payout policy to assess its fundamental strength.
Income Statement
The following table presents The Charles Schwab Corporation’s key income statement figures for the fiscal years 2021 through 2025, illustrating revenue, expenses, profitability, and earnings per share.
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| Revenue | 19B | 22.3B | 25.5B | 26B | 26.8B |
| Cost of Revenue | 476M | 1.55B | 6.68B | 6.39B | 2.92B |
| Operating Expenses | 10.8B | 11.4B | 12.5B | 11.9B | 12.5B |
| Gross Profit | 18.5B | 20.8B | 18.8B | 19.6B | 23.9B |
| EBITDA | 8.88B | 10.6B | 7.72B | 9.13B | 12.8B |
| EBIT | 7.71B | 9.39B | 6.38B | 7.69B | 11.5B |
| Interest Expense | 476M | 1.55B | 6.68B | 6.39B | 3.75B |
| Net Income | 5.85B | 7.18B | 5.07B | 5.94B | 8.85B |
| EPS | 2.84 | 3.52 | 2.55 | 3.00 | 4.68 |
| Filing Date | 2022-02-24 | 2023-02-24 | 2024-02-23 | 2025-02-26 | 2026-01-21 |
Income Statement Evolution
From 2021 to 2025, The Charles Schwab Corporation exhibited steady revenue growth totaling 41.3%, with a moderate 3.25% increase from 2024 to 2025. Net income grew by 51.2% over the period, driven by a 44.3% rise in net margin in the latest year. Gross and EBIT margins improved significantly, reaching 89.1% and 42.7%, respectively, while operating expenses grew at a pace matching revenue, slightly pressuring margins.
Is the Income Statement Favorable?
The 2025 income statement shows generally favorable fundamentals with revenue of $26.8B and net income of $8.85B, reflecting strong profitability and margin expansion. Despite a relatively high interest expense ratio of 14%, the company’s net margin of 33% and EPS growth of 56% indicate robust earnings power. Overall, 78.6% of key income metrics are favorable, supporting a positive assessment of financial strength.
Financial Ratios
The following table presents key financial ratios for The Charles Schwab Corporation (SCHW) over the last five fiscal years, illustrating profitability, valuation, liquidity, leverage, and operational efficiency:
| Ratios | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Net Margin | 27% | 31% | 32% | 20% | 23% |
| ROE | 6% | 10% | 20% | 12% | 12% |
| ROIC | 5% | 7% | 10% | 5% | 6% |
| P/E | 23 | 27 | 22 | 25 | 23 |
| P/B | 1.4 | 2.8 | 4.3 | 3.1 | 2.8 |
| Current Ratio | 0.93 | 0.93 | 0.52 | 0.54 | 0.54 |
| Quick Ratio | 0.93 | 0.93 | 0.52 | 0.54 | 0.54 |
| D/E | 0.24 | 0.42 | 1.03 | 1.44 | 0.93 |
| Debt-to-Assets | 2% | 4% | 7% | 12% | 9% |
| Interest Coverage | 10.3 | 16.2 | 6.1 | 1.0 | 1.2 |
| Asset Turnover | 0.02 | 0.03 | 0.04 | 0.05 | 0.05 |
| Fixed Asset Turnover | 3.2 | 4.4 | 4.8 | 5.9 | 6.6 |
| Dividend Yield | 1.7% | 1.1% | 1.3% | 1.8% | 1.7% |
Evolution of Financial Ratios
From 2020 to 2024, Charles Schwab’s Return on Equity (ROE) showed an overall upward trend, reaching 12.28% in 2024, indicating moderate improvement in profitability. The Current Ratio remained consistently below 1, around 0.54 in 2024, reflecting limited short-term liquidity. The Debt-to-Equity Ratio increased from 0.24 in 2020 to 0.93 in 2024, signaling higher leverage with some fluctuation in profitability margins over the years.
Are the Financial Ratios Fovorable?
In 2024, profitability ratios like net margin (22.85%) were favorable, while ROE (12.28%) and return on invested capital (5.61%) were neutral. Liquidity ratios, including current and quick ratios near 0.54, were unfavorable, suggesting potential liquidity constraints. Leverage measures such as debt-to-equity (0.93) were neutral, and asset turnover (0.05) was unfavorable. Market valuation ratios like P/E (22.77) and P/B (2.8) were neutral. Overall, the ratio profile for 2024 is balanced with equal favorable and unfavorable factors, resulting in a neutral stance.
Shareholder Return Policy
The Charles Schwab Corporation maintains a consistent dividend payout, with a payout ratio around 38-45% and a dividend yield near 1.6-1.8% over recent years. Dividend payments are supported by solid free cash flow coverage, complemented by ongoing share buyback programs.
This balanced approach between dividends and buybacks appears aligned with sustainable long-term shareholder value creation, reflecting prudent distribution without compromising financial flexibility or growth investments.
Score analysis
The following radar chart illustrates key financial scores reflecting the company’s valuation and performance metrics:
The Charles Schwab Corporation shows a favorable discounted cash flow score of 4 and a very favorable return on equity score of 5, alongside a favorable return on assets score of 4. However, it scores moderately on debt to equity and price to earnings ratios, with a very unfavorable price to book score of 1.
Analysis of the company’s bankruptcy risk
The Altman Z-Score places the company in the distress zone, indicating a high risk of financial distress and potential bankruptcy:
Is the company in good financial health?
The Piotroski diagram below presents the company’s financial strength based on nine criteria:
With a Piotroski score of 6, the company is assessed as having average financial health, reflecting moderate strengths in profitability, leverage, and liquidity metrics.
Competitive Landscape & Sector Positioning
This sector analysis will examine The Charles Schwab Corporation’s strategic positioning, revenue streams, key products, and main competitors. I will evaluate whether the company holds a competitive advantage within the financial services industry.
Strategic Positioning
The Charles Schwab Corporation maintains a concentrated focus on financial services, with revenues predominantly from Investor Services ($15.6B in 2024) and Advisor Services ($4.0B in 2024). Its geographic footprint includes 400 domestic branches across 48 states plus international locations in the UK, Hong Kong, and Singapore.
Revenue by Segment
This pie chart presents The Charles Schwab Corporation’s revenue distribution by segment for the fiscal year 2024, highlighting the contributions of key business areas.
In 2024, Investor Services remained the dominant revenue driver with $15.6B, showing growth from $14.4B in 2023, while Advisor Services declined to $4.0B from $4.4B. This indicates a concentration in Investor Services, which fuels Schwab’s business, although the Advisor Services segment saw a slight slowdown, suggesting potential risks if diversification does not improve.
Key Products & Brands
The Charles Schwab Corporation offers a diverse range of financial products and services across two main segments:
| Product | Description |
|---|---|
| Investor Services | Provides retail brokerage, investment advisory, banking and trust, retirement plans, equity compensation plan services, and clearing services. |
| Advisor Services | Offers custodial, trading, banking, retirement business, and corporate brokerage services, including managed portfolios, mutual funds, ETFs, and trust services. |
The company’s product offerings are organized primarily into Investor Services and Advisor Services segments, covering a broad spectrum of wealth management, brokerage, advisory, and banking solutions tailored to retail and institutional clients.
Main Competitors
There are 6 main competitors in the Financial – Capital Markets industry; here are the top 6 leaders by market capitalization:
| Competitor | Market Cap. |
|---|---|
| Morgan Stanley | 289B |
| The Goldman Sachs Group, Inc. | 287B |
| The Charles Schwab Corporation | 185B |
| Robinhood Markets, Inc. | 102B |
| Raymond James Financial, Inc. | 33B |
| Hut 8 Corp. | 5B |
The Charles Schwab Corporation ranks 3rd among its 6 competitors, with a market cap at 64.16% of the leading Morgan Stanley. It stands above both the average market cap of the top 10 competitors (150B) and the median sector market cap (143B). The company maintains a significant 54.65% gap above its nearest competitor, highlighting its solid positioning in the sector.
Comparisons with competitors
Check out how we compare the company to its competitors:
Does SCHW have a competitive advantage?
The Charles Schwab Corporation demonstrates a competitive advantage through its favorable income statement metrics, including a strong gross margin of 89.11% and an EBIT margin of 42.69%, accompanied by significant net margin growth of 6.99% over the overall period. Its revenue and net income growth, respectively 41.31% and 51.19% over 2021-2025, further support efficient capital use and operational strength despite an unfavorable interest expense ratio.
Looking ahead, Charles Schwab’s diverse business segments in Investor and Advisor Services position it to capitalize on expanding markets, including wealth management, brokerage, and financial advisory services. The company’s presence in multiple regions and ongoing product offerings such as proprietary ETFs and personalized portfolio management suggest opportunities for growth and further strengthening of its competitive position.
SWOT Analysis
This SWOT analysis highlights The Charles Schwab Corporation’s key internal strengths and weaknesses alongside external opportunities and threats to guide investment decisions.
Strengths
- strong gross margin at 89.11%
- favorable EBIT margin of 42.69%
- diversified financial services portfolio
Weaknesses
- high interest expense at 13.99%
- low liquidity ratios (current and quick ratio at 0.54)
- moderate debt-to-equity ratio
Opportunities
- expanding wealth management market
- growth in digital and advisory services
- increasing demand for retirement planning
Threats
- intense industry competition
- regulatory changes in financial sector
- economic downturn impacting client assets
Overall, Schwab’s robust profitability and diversified services position it well for growth, though liquidity constraints and interest costs require caution. Strategic focus on digital innovation and market expansion will be critical to offset competitive and regulatory risks.
Stock Price Action Analysis
The following weekly stock chart illustrates The Charles Schwab Corporation’s price movements and volatility over the past 12 months:
Trend Analysis
Over the past 12 months, SCHW’s stock price increased by 53.72%, indicating a bullish trend with clear acceleration. The price ranged between a low of 62.08 and a high of 103.82, supported by a standard deviation of 11.53, reflecting moderate volatility. Recent weeks show continued positive momentum with a 7.29% gain.
Volume Analysis
Trading volume for SCHW has been increasing, with buyers accounting for 57.24% of total activity over the last year. In the recent 2.5-month period, buyer dominance slightly strengthened to 58.49%, indicating sustained investor interest and a buyer-driven market sentiment supporting the upward price trend.
Target Prices
Analysts present a moderate target consensus for The Charles Schwab Corporation.
| Target High | Target Low | Consensus |
|---|---|---|
| 148 | 105 | 122.67 |
The target prices indicate a cautiously optimistic outlook, with the consensus suggesting a potential upside from current levels while acknowledging some downside risk.
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Analyst & Consumer Opinions
This section reviews recent analyst ratings and consumer feedback regarding The Charles Schwab Corporation’s market performance and services.
Stock Grades
Here are the latest verified stock grades for The Charles Schwab Corporation from recognized financial analysts:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Barclays | Maintain | Overweight | 2026-01-22 |
| UBS | Maintain | Buy | 2026-01-22 |
| Truist Securities | Maintain | Buy | 2026-01-22 |
| TD Cowen | Maintain | Buy | 2026-01-22 |
| TD Cowen | Maintain | Buy | 2026-01-14 |
| Piper Sandler | Maintain | Neutral | 2026-01-14 |
| Citizens | Maintain | Market Outperform | 2026-01-12 |
| Barclays | Maintain | Overweight | 2026-01-08 |
| Truist Securities | Maintain | Buy | 2026-01-07 |
| UBS | Maintain | Buy | 2026-01-07 |
The consensus grades show a dominant Buy sentiment with 29 analysts recommending buy, 18 hold, and 3 sell ratings, indicating a generally positive outlook with some caution among investors.
Consumer Opinions
Consumer sentiment around The Charles Schwab Corporation (SCHW) reflects a mix of appreciation for its user-friendly platform and some concerns about customer service response times.
| Positive Reviews | Negative Reviews |
|---|---|
| “Schwab’s trading platform is intuitive and reliable.” | “Customer support can be slow during peak hours.” |
| “Low fees and transparent pricing are a big plus.” | “Mobile app occasionally glitches during market hours.” |
| “Wide range of investment options for all levels.” | “Account setup process took longer than expected.” |
Overall, consumers praise Schwab for its competitive fees and comprehensive platform, but recurring issues with customer support responsiveness and app stability suggest areas for improvement.
Risk Analysis
Below is a summary table of key risks associated with The Charles Schwab Corporation (SCHW), highlighting their probability and potential impact:
| Category | Description | Probability | Impact |
|---|---|---|---|
| Financial Health | Altman Z-Score indicates high bankruptcy risk, suggesting financial distress. | High | High |
| Liquidity | Unfavorable current and quick ratios (0.54), signaling potential short-term liquidity issues. | Medium | Medium |
| Market Volatility | Beta near 0.94 indicates moderate stock price sensitivity to market fluctuations. | Medium | Medium |
| Valuation | Neutral P/E (22.77) and unfavorable P/B (2.8) ratios may limit upside potential. | Medium | Medium |
| Leverage | Moderate debt-to-equity ratio (0.93) but favorable debt-to-assets (9.41%), manageable leverage. | Medium | Medium |
| Operational Efficiency | Low asset turnover (0.05) may constrain growth and profitability expansion. | Medium | Medium |
The most pressing risk is the very low Altman Z-Score placing SCHW in the distress zone, signaling elevated bankruptcy risk despite a decent Piotroski Score of 6. Additionally, liquidity concerns and moderate market sensitivity warrant cautious monitoring given recent market uncertainties and fluctuating interest rates in the financial sector.
Should You Buy The Charles Schwab Corporation?
The Charles Schwab Corporation appears to be characterized by improving profitability and a growing ROIC trend, suggesting enhanced operational efficiency, while its leverage profile seems manageable. Despite some moderate valuation and debt scores, the overall rating of B+ indicates a very favorable investment profile, though distress signals in bankruptcy risk warrant cautious interpretation.
Strength & Efficiency Pillars
The Charles Schwab Corporation exhibits solid profitability with a net margin of 22.85% and a return on equity (ROE) of 12.28%, indicating consistent earnings generation relative to shareholder equity. Although the return on invested capital (ROIC) is moderate at 5.61%, the company shows a growing ROIC trend of 18.6%, suggesting improving operational efficiency. Financial health signals are mixed: while the Altman Z-Score sits deep in the distress zone at 0.03, raising concerns, the Piotroski Score of 6 reflects average financial strength. The company’s debt-to-assets ratio is favorable at 9.41%, supporting a conservative leverage profile.
Weaknesses and Drawbacks
Several valuation and liquidity metrics reveal potential vulnerabilities. The price-to-earnings ratio (P/E) stands at 22.77, reflecting a neutral valuation, but the price-to-book ratio (P/B) of 2.8 appears less attractive, indicating a premium relative to book value and possible market overvaluation. Liquidity is a notable concern with a current ratio and quick ratio both at 0.54, signaling limited short-term asset coverage against liabilities. Additionally, asset turnover is low at 0.05, suggesting inefficient use of assets to generate revenue. Interest expense is also unfavorable at 13.99%, potentially pressuring profitability.
Our Verdict about The Charles Schwab Corporation
The long-term fundamental profile of The Charles Schwab Corporation may appear favorable given improving profitability and conservative leverage, despite liquidity challenges. The overall stock trend is bullish with accelerating price gains and a 53.72% increase over the analyzed period. Recent period analysis shows slight buyer dominance at 58.49%, reinforcing resilience. This suggests the company could represent an attractive long-term exposure, though the liquidity weaknesses and mixed financial health imply that cautious monitoring is warranted.
Disclaimer: This content is for informational purposes only and does not constitute financial, investment, or other professional advice. Investing in financial markets involves a significant risk of loss, and past performance is not indicative of future results.
Additional Resources
- Charles Schwab (SCHW) Received an Outperform Rating from Citizens Amid High Consensus Forecasts – Yahoo Finance Singapore (Jan 25, 2026)
- 21,177 Shares in The Charles Schwab Corporation $SCHW Purchased by Rakuten Investment Management Inc. – MarketBeat (Jan 24, 2026)
- Charles Schwab Remains A Reliable Long-Term Winner (NYSE:SCHW) – Seeking Alpha (Jan 21, 2026)
- Is Schwab’s Record 2025 Results and Buybacks Reshaping The Investment Case For Charles Schwab (SCHW)? – Sahm (Jan 24, 2026)
- Schwab Advances Forge Deal And AI Push To Broaden Wealth Platform – simplywall.st (Jan 24, 2026)
For more information about The Charles Schwab Corporation, please visit the official website: schwab.com
