When Charles Schwab reports fourth quarter 2025 earnings before the market opens Wednesday, January 21, investors will be watching for confirmation that the brokerage industry's recovery from the regional banking turmoil of 2023-2024 is complete. Analysts expect strong results, with earnings per share projected to jump 34.7% to $1.36 and revenues expected to climb 18.3% to $6.3 billion.
If Schwab delivers on those expectations, it will mark another milestone in a remarkable turnaround story—and potentially validate the market's enthusiasm for financial stocks heading into 2026.
The Setup: What Analysts Expect
Here's the consensus view heading into Wednesday's report:
- Earnings per share: $1.36 (vs. $1.01 in Q4 2024, +34.7%)
- Revenue: $6.3 billion (vs. $5.33 billion in Q4 2024, +18.3%)
- Net interest revenue: $3.13 billion (vs. $2.53 billion, +23.7%)
- Asset management fees: $1.70 billion (vs. $1.51 billion, +12.5%)
Over the past 30 days, analysts have revised their Q4 EPS estimates upward by 3.3%, reflecting growing confidence in Schwab's near-term prospects. The company has surpassed Wall Street estimates in each of its last four quarterly reports.
The Turnaround Story
To understand why these numbers matter, it helps to recall where Schwab was two years ago. In early 2023, the regional banking crisis that claimed Silicon Valley Bank and Signature Bank also raised questions about Schwab's deposit base and interest rate exposure. The stock fell from over $80 to below $50 as investors worried about unrealized losses in the company's bond portfolio.
Those fears proved overblown. Schwab's retail-focused business model—serving individual investors rather than venture-backed startups—provided stability that pure regional banks lacked. The company's integration of TD Ameritrade, while challenging, ultimately strengthened its competitive position.
Now, with interest rates elevated and trading activity robust, Schwab is reaping the benefits of scale and stability. The stock has climbed 31.5% over the past year, outperforming both the S&P 500 (+15.4%) and the financial sector ETF (+14.5%).
Key Themes to Watch
Net Interest Margin Recovery
Net interest revenue—the spread between what Schwab earns on client cash and what it pays depositors—is expected to rise 23.7% to $3.13 billion. This growth reflects both higher rates and the stabilization of Schwab's deposit base after the turbulence of 2023-2024.
The Fed's rate cuts in 2025 created some headwinds for net interest income, but Schwab has successfully managed the transition. Investors will watch for guidance on how further potential rate cuts might affect this crucial revenue line.
Client Asset Growth
Schwab manages trillions in client assets, and the combination of market gains and new account growth drives asset management fees. With markets near record highs, asset-based revenues should benefit from the wealth effect.
The company's monthly statistics, released alongside earnings, will show net new assets—a key measure of whether Schwab is gaining or losing ground versus competitors like Fidelity and Vanguard.
Trading Activity
While commission-free trading has eliminated direct trading revenue, active trading drives other business lines including payment for order flow, securities lending, and margin interest. The market's strong performance in late 2025 likely supported healthy trading volumes.
TD Ameritrade Integration
The 2020 acquisition of TD Ameritrade created integration challenges that are now largely resolved. Investors will listen for any updates on final cost synergies and client retention as the last phases of integration complete.
The Valuation Question
Schwab trades at approximately 19x forward earnings estimates—a premium to the broader financial sector but arguably justified by its growth trajectory and business quality. Bears argue that the multiple leaves little room for disappointment; bulls counter that Schwab's dominant retail position and multiple revenue streams warrant premium pricing.
Analysts maintain a broadly bullish view:
- Strong Buy: 14 analysts
- Moderate Buy: 3 analysts
- Hold: 4 analysts
- Moderate/Strong Sell: 2 analysts
- Average price target: $112.65 (approximately 16% upside from current levels)
Morningstar's three-star rating suggests the stock is fairly valued at current levels, with a fair value estimate of $109 per share.
Full-Year and 2026 Outlook
Beyond Q4, analysts project continued growth:
- Full-year 2025 EPS: $4.81 (vs. $3.25 in 2024, +48%)
- Full-year 2026 EPS: $5.59 (vs. $4.81 in 2025, +16.2%)
The deceleration from 48% growth in 2025 to 16% in 2026 reflects the lapping of easy comparisons rather than any fundamental weakness. If Schwab achieves these estimates, it will have more than recovered from the crisis-era lows.
What Could Go Wrong
Despite the positive setup, risks remain:
Interest Rate Sensitivity
If the Fed cuts rates more aggressively than expected, Schwab's net interest income would face pressure. The company has reduced this risk through balance sheet management, but it remains a factor.
Competition
Fidelity, Vanguard, and newer entrants like Robinhood continue to compete aggressively for retail investors. Price wars in areas like money market yields could pressure margins.
Market Correction
A significant market decline would reduce asset-based revenues and potentially dampen client activity. With valuations elevated, this risk is worth monitoring.
Regulatory Changes
The SEC's ongoing review of payment for order flow and other practices could affect Schwab's business model, though any changes would likely take years to implement.
What Investors Should Watch Wednesday
When Schwab reports before the bell on January 21, focus on:
- Net new asset flows: Are clients adding money or withdrawing?
- Net interest margin guidance: How is management positioning for potential rate cuts?
- Trading activity commentary: Did market strength translate to retail engagement?
- 2026 guidance: Is management confident in the consensus growth outlook?
Charles Schwab's transformation from discount broker to full-service wealth manager has been decades in the making. Wednesday's results will show whether the latest chapter of that story continues to unfold as investors hope—or whether the challenges that seemed to be in the past still linger.
