Why Is Charles Schwab (SCHW) Up 10% Since Last Earnings Report?

It has been about a month since the last earnings report for The Charles Schwab Corporation (SCHW). Shares have added about 10% in that time frame, outperforming the S&P 500.

But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Charles Schwab due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Schwab's Q2 Earnings Beat Estimates on Robust Trading & NIR

Schwab’s second-quarter 2026 adjusted earnings of $1.62 per share outpaced the Zacks Consensus Estimate of $1.53. The bottom line soared 42% year over year.

Quarterly results benefited from robust performance of the asset management business and record trading revenues. Higher net interest revenues 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 $2.8 billion or $1.54 per share, up from $2.13 billion or $1.08 per share in the year-ago quarter.

Revenues Rise to Record Level, Expenses Rise

Quarterly net revenues were a record $7.07 billion, jumping 21% year over year. The increase was driven by higher NIR (up 19%), trading revenue (28%), bank deposit account fees (35%) and asset management and administration fees (16%). The top line easily surpassed the Zacks Consensus Estimate of $6.89 billion.

Total non-interest expenses (GAAP basis) increased 12% to $3.4 billion. Excluding non-recurring items, adjusted total expenses were $3.23 billion, up 11% year over year.

The pre-tax profit margin (adjusted) increased to 54.3% from 50.1% in the prior-year quarter.

At the end of the second quarter, Schwab’s average interest-earning assets rose 5% to $445 billion. 

As of June 30, 2026, the annualized return on equity was 25%, up from 19% in the prior-year quarter.

Other Business Metrics

As of June 30, 2026, Schwab’s total client assets reached a record $13.08 trillion (up 22% year over year). During the reported quarter, net new assets brought by new and existing clients were $118.7 billion.

Schwab added 1.4 million new brokerage accounts during the quarter. As of June 30, 2026, the company had 39.8 million active brokerage accounts, 2.4 million banking accounts and 5.9 million corporate retirement plan participants.

Share Repurchase Update

During the reported quarter, Schwab repurchased 11.2 million shares for $1 billion.

Outlook

Management’s updated 2026 scenario assumes the Fed funds upper bound to end the year at 4%, changed from the previously mentioned 3.75%. Likewise, equity markets are expected to rise 13% from the 2025-end levels, changed from the previously mentioned 10% increase. The updated scenario also includes full-year daily average trades reaching 10.6 million, with organic net asset growth of 5%.

Based on these assumptions, Schwab expects 2026 revenue growth of 17.5-18.5%.

Average interest-earning assets are expected to expand modestly in the year on a year-over-year basis. NIM is expected to expand to 3-3.10% in 2026, with fourth-quarter NIM reaching 3.25-3.30%.

In terms of expenses, Schwab expects adjusted expenses to rise 9.5-10.5% in 2026. Management attributed this to higher volume-related costs tied to strong business performance and trading activity, as well as the inclusion of Forge Global Holdings (acquired in March 2026).

The 2026 adjusted pre-tax margin is expected in the low 50% range.

The company expects high-single-digit to low-double digit revenue growth coupled with positive operating leverage and balance sheet management to result in mid-teens EPS growth through the cycle.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a upward trend in estimates review.

VGM Scores

Currently, Charles Schwab has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock has a grade of C on the value side, putting it in the middle 20% for value investors.

Overall, the stock has an aggregate VGM Score of F. 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 belongs to the Zacks Financial - Investment Bank industry. Another stock from the same industry, Citigroup (C), has gained 0.5% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026.

Citigroup reported revenues of $24.77 billion in the last reported quarter, representing a year-over-year change of +14.3%. EPS of $3.15 for the same period compares with $1.96 a year ago.

For the current quarter, Citigroup is expected to post earnings of $2.68 per share, indicating a change of +19.6% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.6% over the last 30 days.

Citigroup has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.

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This article originally published on Zacks Investment Research (zacks.com).

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