Charles Schwab (SCHW) Stock EPS Jump Reinforces Bullish Profitability Narratives

Charles Schwab (SCHW) opened Q2 2026 with headline figures that put earnings in clear focus, reporting total revenue of US$7.1 billion and basic EPS of US$1.55, backed by trailing twelve month revenue of US$26.0 billion and EPS of US$5.51 alongside earnings growth of 43.2% over the past year. Over recent quarters, the company has seen revenue move from US$5.9 billion and EPS of US$1.09 in Q2 2025 to US$7.1 billion and EPS of US$1.55 in Q2 2026. Trailing net profit margin sits at 37.4% compared with 31.4% a year ago, setting up a picture of higher profitability that investors will likely weigh against more measured earnings and revenue growth forecasts.

See our full analysis for Charles Schwab.

With the latest results on the table, the next step is to see how these profit and margin trends line up with the widely followed narratives around Charles Schwab and where those stories might need updating.

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Margins and EPS trends back the bullish revenue story

• On a trailing basis, Charles Schwab earned US$9.7b in net income on US$26.0b of revenue, giving a 37.4% net margin versus 31.4% a year earlier, while TTM EPS moved from US$3.72 to US$5.51 over the same period.
• Supporters of the bullish narrative point to this margin level alongside catalysts like stronger RIA custody flows and higher use of lending products, yet the 10.4% 5 year earnings growth rate is much more moderate than the 43.2% jump over the last year. This means:
  • The recent profitability looks strong enough to fit a bullish view, but the step up from TTM EPS of US$3.72 to US$5.51 is far steeper than the longer term trend, so bulls need to be comfortable that this is not just a one off period.
  • Forecast earnings growth of about 10.6% per year is also far below the 43.2% trailing earnings growth, so investors who agree with the bullish case are effectively assuming the current margin profile can be maintained even as growth slows toward that forecast pace.

Bulls argue that Schwab’s recent profitability can support a longer term growth story around younger clients, RIAs and new products, and that is exactly what the detailed bull case narrative unpacks in full 🐂 Charles Schwab Bull Case

Slower forecasts give bears some support

• Earnings are forecast to grow around 10.6% per year with revenue at about 7.9% per year, both below the US market forecasts of 17.7% and 12.6% respectively, even after Schwab’s TTM earnings growth of 43.2%.
• Critics in the bearish narrative argue that heavier spending on technology, crypto and balance sheet initiatives could pressure margins if activity cools, and the data gives them some talking points:
  • The reliance on recent strong markets and higher trading activity is visible in the sharp step up from Q2 2025 EPS of US$1.09 to Q2 2026 EPS of US$1.55 and from quarterly revenue of US$5.9b to US$7.1b, so a quieter market phase could make it harder to repeat that pace.
  • At the same time, the move from a TTM margin of 31.4% to 37.4% sits above the consensus expectation that margins trend around the mid 30s. This means any rise in costs that pushes margins back toward those assumptions would align closely with the more cautious bearish view.

Skeptics argue that if growth cools from 43.2% earnings growth to around 10.6% a year, Schwab’s current profitability could look cyclical rather than durable, and the detailed bear case explains how that scenario might play out 🐻 Charles Schwab Bear Case

Valuation gap vs TTM profitability

• With a P/E of 17.9x on trailing EPS of US$5.51 and a share price of US$99.96, Schwab sits below an industry P/E of 39.7x, a peer average of 31.3x and an indicated DCF fair value of about US$145.03, while the single allowed analyst target of US$122.11 is above where the stock trades today.
• Consensus narrative views this mix as a balance of opportunity and restraint, and the numbers show why:
  • The 37.4% trailing net margin and US$9.7b of TTM net income give some support to the idea that Schwab’s current earnings stream is substantial relative to its US$99.96 share price, which is below both the DCF fair value and the US$122.11 target level.
  • However, because the forecast earnings growth rate of 10.6% lags the wider US market forecast of 17.7%, the lower P/E multiple may also reflect expectations that Schwab’s growth profile is steadier rather than high growth, even with the stronger trailing year in the background.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Charles Schwab on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

If the mix of strong recent earnings and cooler forecasts around Charles Schwab leaves you torn, act now by weighing the full picture of risks and rewards using the 5 key rewards and 1 important warning sign.

See What Else Is Out There

Charles Schwab pairs strong recent earnings with forecasts that point to slower growth than the broader US market, which may limit the appeal for investors seeking faster expansion.

If Schwab’s cooler growth outlook worries you, shift your focus toward companies with stronger growth profiles and appealing valuations by checking out the 48 high quality undervalued stocks.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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