Charles Schwab Earnings: Investment Case Remains Clear Amid Strong Results, Innovation Pipeline

Key Morningstar Metrics for Charles Schwab

• Fair Value Estimate
  : $124.00
• Morningstar Rating
  : ★★★★
• Morningstar Economic Moat Rating
  : Wide
• Morningstar Uncertainty Rating
  : Medium

What We Thought of Charles Schwab’s Earnings

Charles Schwab SCHW reported strong second-quarter 2026 results on the back of market and trading activity tailwinds, generating $7.08 billion in net revenue—up 21% annually—and $1.62 in adjusted diluted EPS, up a striking 42% from the year-ago period.

Why it matters: We’ve adopted a far more constructive stance regarding the prospects of Schwab’s first-party wealth management business, which is a growing priority. After another quarter of outstanding growth in inflows (up 53% annually), we’ve meaningfully increased our forecast growth in fee-based assets under management to 12.2% annualized from 7.2% previously and nudged up the realization rate as more of those come from the more lucrative Schwab Wealth Advisory channel.

• While the increased emphasis on SWA naturally increases tension with the firm’s RIA custody clients, we believe that a balanced approach between maintaining a healthy Schwab Advisor Network referral pipeline and continuing to invest in RIA-facing services like alternative asset access through Forge Global, a growing bank lending offering, and more advanced tax planning should keep that tension at a low simmer.

The bottom line: As we digest second-quarter results, we’ve raised our fair value estimate for wide-moat Charles Schwab to $124 from $117, reflective of our revised wealth management forecasts, stronger-than-expected quarterly results, and time value.

• Overall, we’re quite constructive regarding Charles Schwab’s current competitive position and its product roadmap. The firm looks set to continue to benefit from strong market growth in both the retail brokerage and wealth management channels and is appropriately leveraging its scale to develop new capabilities and deepen its relationships with clients.
• Schwab remains a compelling growth-at-scale story, with our forecasts calling for 10.0%, 11.3%, and 13.7% 10-year compound annual growth in net revenue, operating income, and diluted EPS, up modestly from our prior update.