QS Research · Michael Burry's Scion Capital analyst template · 2006
SCHWAB CHARLES CORP (SCHW)
As of 2026-11-06 · 11/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case +4% · downside -19% · upside +13%
I keep section 13's TTM base of $10.26B net income to common; at a central 16.0x multiple that is $164.2B, or +4% from the $157.91B market cap, while 2.5x book on $51.45B equity gives $128.6B (-19%) and 17.4x gives $178.5B (+13%). That is not a long under the rule (base below +30%) and not a short (base not -30% or worse), so the stock is a watch: the franchise earns a 19.9% ROE, gathers assets at a record pace, and trades at 15.4x TTM earnings and 3.07x book. The market may be underrating the durability of that ROE and the $190.4B quarterly core net new assets, but it is also right to price in NIR/rate sensitivity, wholesale funding, and the Q3 revenue miss. At $91.49 there is no deep-value margin of safety, so I wait for either a lower price or clearer earnings and capital-return evidence.
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: 3.07x
The 15 boxes
- ✓ 1. Long-form business notes
Schwab is a savings and loan holding company operating wealth management, brokerage, banking, asset management, custody, and advisory services through Investor Services and Advisor Services. It earns primarily net interest revenue, asset management and administration fees, trading revenue, and bank deposit account fees; FY2025 reported revenue was $23.92B, pre-tax income $11.46B, and net income $8.42B. Between FY2020 and FY2025 client assets rose from $6.69T to $11.90T and account counts expanded, with TD Ameritrade integration and a pending Forge private-markets deal marking the main changes.
- ○ 2. Competitive advantage
The only hard evidence in the sources is scale and earnings growth: revenue rose from $11.69B in FY2020 to $23.92B in FY2025, pre-tax income from $4.30B to $11.46B, and reported net income from $3.04B to $8.42B. The sources do not name competitors or document brand, network, switching costs, licences, or a cost advantage, and S26 has no ROE, price/book, or margin lines. On this material I cannot call the advantage durable; the numbers show a larger profitable franchise, not the source of the moat.
- ✓ 3. 10-Q takeaways
Q3 2026 (quarter ended 2026-09-30) showed accelerating operating momentum: net revenues of $7,171 million, up 17% year over year, net income of $2,906 million, up 23%, and diluted EPS of $1.62, up 29%, with no one-off gain needed to get there. Growth came from client asset gathering (total client assets $13.33 trillion, +12% from year-end 2025; core net new assets $190.4 billion in the quarter, +38%), lending (margin loans +22% and bank loans +25% year to date) and trading, partly paid for with higher-cost wholesale funding. Expenses grew slower than revenue (total expenses excluding interest +9%, $3,394 million), lifting the pre-tax margin to 52.7% from 49.2%, and capital return continued with $500 million of buybacks in the quarter and a 19% dividend increase. The 10-Q discloses no formal revenue or EPS 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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