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    Charles Schwab (SCHW) Earnings Put Its Undervalued Narrative Back In Focus

    Simply Wall St·10/20/2026 01:36:44
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    Fresh earnings are setting the tone for Charles Schwab (SCHW) this week after the broker reported third quarter net income of US$2,906 million and basic EPS from continuing operations of US$1.63.

    The fresh earnings beat is landing against a softer tape for Charles Schwab, with the share price at US$89.58 after declining 2.6% on the day and 14.9% over the past month. That pullback contrasts with a 3 year total shareholder return of 89.3%. Long term holders have still seen strong wealth creation even as near term momentum has cooled and recent news on new leadership in securities lending, an international bond ETF launch and Schwab’s role in emerging AI authorization standards has reset expectations around both growth potential and risk.

    Scan how Charles Schwab compares with other wealth and brokerage platforms by reviewing our curated list of list of solid balance sheet and fundamentals (25 results).

    After a sharp slide despite stronger recent earnings, Charles Schwab now poses a simple question to investors: Does the current risk reward still lean toward buyers, or has the easy part of the valuation case already played out?

    Most Popular Narrative: 27% Undervalued

    Charles Schwab's widely followed valuation narrative pegs fair value at $122.32, well above the latest $89.58 close, which puts recent share price weakness directly against a model that still sees meaningful upside based on long term earnings power and client monetization.

    Cross-selling advisory, banking, and lending products to existing clients is moving ahead. Margin balances of US$165.1b and bank loan balances of US$67b in Q2 2026 sit alongside the fact that only about 0.5% of clients use lending products compared with an industry average of 4%, which leaves room for higher net interest revenue and return on client assets.

    See why 74 investors see Charles Schwab as 27% undervalued.

    Result: Fair Value of $122.32 (UNDERVALUED)

    Still, rising spending on technology and AI, along with fee pressure from low-cost brokers, could squeeze Charles Schwab’s profitability if revenue trends do not keep up.

    Find out about the key risks to this Charles Schwab narrative.

    Next Steps

    Mixed messages on Charles Schwab so far. The fastest way to cut through the noise is to check the balance of risks and potential upsides yourself, starting with the 6 key rewards and 1 important warning sign.

    Looking for more investment ideas beyond Charles Schwab?

    If Charles Schwab is on your radar, do not stop there. Broadening your watchlist with targeted screens can reveal opportunities you might otherwise miss.