The Charles Schwab Corporation (SCHW) shares are down about 5% today (trading near $92). The drop comes even though the brokerage posted record third-quarter results before the open on Thursday, October 15.
Revenue rose 17% to $7.17 billion. GAAP EPS hit a record $1.62, and adjusted EPS of $1.69 was up 29% from a year earlier. Clients brought in $190.4 billion in core net new assets, up 38%, and total client assets reached $13.33 trillion.
Schwab’s Flows Beat the Street
Asset gathering was the standout. J.P. Morgan analyst Kenneth Worthington had projected about $160 billion in core net new assets, and Schwab beat that by roughly $30 billion. Clients also opened 1.2 million new brokerage accounts, bringing total client accounts to 48.6 million.
Adjusted EPS topped the $1.66 consensus too. Net interest revenue rose 14% to $3.48 billion. Management also said full-year revenue growth and net interest margin expansion should land near the lower end of its previously announced ranges.
The Engine Is Slowing
That matters because net interest revenue made up about 48% of Schwab’s Q3 revenue.
Net interest income grew 37% year over year in Q3 2025. Growth slowed to 25% in Q4 2025, 16% in Q1 2026 and 19% in Q2. Q3’s $3.48 billion was up 14%, the slowest pace in that run. It was also only about 4% above Q2.
So new client money grew 38%, while the line that brings in about half the revenue grew 14%. The two don’t move together: assets clients invest in stocks or funds don’t add to the cash Schwab earns interest on. Shares fell Thursday despite record asset gathering and earnings, with management pointing to the lower end of its revenue growth and margin guidance.
Is Schwab Stock Cheap for a Reason?
The bull case starts with price. Schwab stock trades at 13.4 times normalized forward earnings. That is about 26% below its five-year average of 18.1x and close to the 12.2x low it hit in 2023. If earnings estimates hold, a return to the average would lift the stock about 35%.
The bear case is that slower net interest income growth could keep investors from paying Schwab’s historical average multiple. At 14% growth, a lower valuation may persist even as client assets reach new highs. This is also the third straight quarter where record results met a falling stock, a pattern we flagged after Q1.
The discount gives patient holders a business with record client flows at a multiple near its five-year low. It doesn’t make the stock cheap on its own, though. A re-rating likely needs net interest income growth to stabilize when Schwab reports Q4 in January.
Pull up Schwab’s net interest income trend and its full P/E history on TIKR, and see how it compares with other brokers, for free. Learn more here.
So what is Charles Schwab stock actually worth?
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