Schwab's Record Q3 2026 Results Deepen the Value Case

What happened

In Q3 2026, Schwab posted record results with net revenue up 17% and adjusted diluted EPS up 29% year-over-year, driven by strong organic asset gathering, expanding net interest margin, and higher wealth advisory penetration. This builds on the recovery already flagged in the earlier deep-value assessment, which noted record client assets of ~$10.1 trillion and a re-acceleration in revenue and EBITDA through mid-2025. The new figures suggest the company has sustained its momentum, with operating leverage and deposit repricing contributing more than expected to profitability. Despite the strong earnings, shares trade at a forward P/E of 13.93, well below the earlier TTM multiple near 23x, implying the market has not yet fully recognized the earnings power. This disconnect creates an unusually wide margin of safety relative to the $147 price target, though analysts should remain mindful of potential regulatory and market-structure headwinds that could slow the pace of gains.

Implication

The robust Q3 2026 performance validates the scale advantages of Schwab's integrated brokerage and banking model, and suggests that the company is successfully monetizing its record client asset base. With a forward P/E of 13.93, the stock appears significantly undervalued relative to its historical range and the $147 price target, providing a favorable risk/reward for long-term investors. However, investors should monitor upcoming regulatory changes around order routing and access fees, which could pressure trading-related revenues despite the strong current numbers. Additionally, the sustainability of net interest margin expansion depends on the interest rate environment, and any reversal could temper earnings growth. Overall, the new data supports a BUY rating with higher conviction than before, but position sizing should account for the cyclical and regulatory risks inherent in the brokerage industry.

Thesis delta

The previous master report already held a BUY stance based on improving fundamentals and a ~23x TTM P/E. The new Q3 2026 results significantly exceed those expectations, with even stronger revenue and EPS growth, and the forward multiple has compressed to 13.93, implying the market is undervaluing the earnings trajectory. This shifts the thesis from a moderate BUY to a strong BUY, with higher conviction and a larger margin of safety.