QS Research · Michael Burry's Scion Capital analyst template · 2006
SCHWAB CHARLES CORP (SCHW)
As of 2026-11-08 · 11/15 boxes filled from SEC filings and market data
Conclusion: PASS
Conviction low · base case none · downside -18% · upside +14%
Schwab is a high-quality secular compounder - TTM revenue $27.06B, net income to common $10.26B, 22.7% ROE on $45.23B common equity - but at $91.49 it trades at 15.4x TTM earnings and 3.49x book, above BAC/GS/JPM/MS and near LPLA, so the quality is already in the price. Holding the company's own 15.4x P/E, the TTM base is 10.26×15.4/1,726.01 = $91.5 (0.0%); a reversion to FY2025's $8.42B net income to common gives 8.42×15.4/1,726.01 = $75.1 (-17.9%); annualizing Q3 2026 adjusted EPS of $1.69 gives 4×1.69×15.4 = $104.1 (+13.8%). That is a flat base with more downside than upside and no catalyst strong enough to justify a rerating, so this is a pass, not a long or a short. The record Q3 inflows and NIM expansion are real, but with no numeric guidance and a rate path that swings net interest revenue, I need a lower entry price.
Key numbers
- Share price: $91.49
- Market cap: $157.91B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $27.06B
- P/E (TTM): 15.4x
- Price / book: 3.49x
The 15 boxes
- ✓ 1. Long-form business notes
Schwab is a savings and loan holding company running two segments — Investor Services (retail brokerage, advisory, banking, workplace/retirement and stock plan services, mutual fund clearing) and Advisor Services (custody, trading, banking and support for independent RIAs) — earning mainly net interest revenue, asset management and administration fees, trading revenue and bank deposit account fees. Between the oldest annual report here (FY2020) and the newest (FY2025) the balance sheet and client base roughly doubled: $6.69 trillion of client assets and 29.6 million active brokerage accounts at 12/31/2020 became $11.90 trillion and 38.5 million at 12/31/2025, with revenue rising from $11.69B (FY2020) to $23.92B (FY2025) and net income to common from $3.04B to $8.42B. The main structural changes were the October 2020 TD Ameritrade acquisition (with its IDA sweep arrangement) and, at the newest report, a pending ~$660 million Forge acquisition plus 2025-2026 expansion into digital assets and private-company equity services. It is regulated as a Category III large banking organization, with ~$491B of consolidated assets at 12/31/2025 and a 2.5% stress capital buffer applying from 10/1/2025.
- ○ 2. Competitive advantage
S26 shows scale and earnings growth—revenue $11.69B FY2020 to $23.92B FY2025, pre-tax income $4.30B to $11.46B, net income to common $3.04B to $8.42B—plus $49.42B total equity and $7.35B of FY2025 buybacks. That is consistent with a durable scale/capital advantage, but the provided sources do not document brand, network, switching costs or licenses, and they do not name competitors or give market share. The only text source is a generic risk-factor excerpt, so the moat is not proven from these sources.
- ✓ 3. 10-Q takeaways
Q3 2026 produced record net revenues of $7.2 billion (+17% YoY) and net income of $2.9 billion (+23%), with diluted EPS of $1.62 (+29%) and adjusted EPS of $1.69 excluding $151 million of pre-tax transaction-related costs. Net interest margin expanded to 3.04% and pre-tax margin to 52.7%; client assets reached $13.33 trillion and Q3 core net new assets were $190.4 billion (+38%). Expenses excluding interest rose 9% to $3.4 billion, Q3 buybacks were $500 million ($3.9 billion YTD), and the Tier 1 leverage ratio was 8.9%. The 10-Q reports no material risk-factor changes except the spot cryptocurrency offer; neither the 10-Q nor the Q3 earnings release gives numeric guidance.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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