Abstract
Charles Schwab will report fourth-quarter results on January 21, 2026 Pre-Market; this preview consolidates current-quarter forecasts and recent trends to frame expectations for revenue, margins, net profit, and adjusted EPS alongside the latest institutional perspectives.
Market Forecast
Consensus tracking of Charles Schwab’s current quarter indicates Revenue of 6.37 billion, up 22.80% year over year; EBIT of 3.43 billion, up 42.00%; and adjusted EPS of 1.38, up 51.09%. Forecast gross profit margin and net profit margin are not explicitly provided; the outlook embeds a higher earnings run-rate as operating leverage improves with stabilizing client cash dynamics and normalized deposit betas.
The main business is expected to show resilient momentum in net interest activities and steady fee-based contributions from asset management and administration, while trading-related revenue should remain supportive into quarter-end. Net interest value remains the most promising revenue driver at an estimated multibillion-dollar quarterly run rate, with recovery tailwinds from improving balances and pricing; last quarter it was 3.05 billion, providing a high-quality base for year-over-year growth.
Last Quarter Review
Charles Schwab’s prior quarter delivered Revenue of 6.14 billion, gross profit margin of 97.57%, GAAP net profit attributable to the parent company of 2.36 billion, a net profit margin of 38.44%, and adjusted EPS of 1.31, increasing 70.13% year over year.
Operating execution ran ahead of expectations as both EBIT and EPS exceeded prior estimates, aided by disciplined expense control and revenue outperformance versus plan. Main business highlights included net interest value of 3.05 billion, asset management and administration fees of 1.67 billion, trading of 0.99 billion, bank deposit account fees of 0.25 billion, and other revenue of 0.17 billion, reflecting a diversified multi-engine revenue composition with net interest activities as the anchor.
Current Quarter Outlook
Main business: Net interest activities and fee engines
The core franchise enters the quarter with a high gross profit margin of 97.57% and a demonstrated net profit margin of 38.44%, giving Charles Schwab ample operating cushion as it navigates the late-cycle interest rate mix. The net interest value line benefits from gradually stabilizing client cash and moderating outflows into higher-yield alternatives, which together support a healthier average interest-earning asset base. On the fee side, asset management and administration revenues align to market levels and client asset growth, offering partial insulation if rate dynamics turn less favorable.
Management’s guidance cadence implies that the company is prioritizing balanced growth while protecting margins, leveraging operating efficiency to translate revenue into earnings. The quarter’s setup reflects operating leverage, with consensus looking for EBIT of 3.43 billion and EPS of 1.38, both carrying double-digit year-over-year growth signals. Within this context, expense discipline and technology-driven productivity remain incremental tailwinds for the margin profile.
Most promising business: Net interest value
Net interest value, at 3.05 billion last quarter, stands out as the pivotal earnings driver given its scale and direct sensitivity to rate and balance dynamics. A more stable rate environment can reduce deposit migration to higher-yielding alternatives, preserving spreads, while a resilient asset gathering engine helps sustain interest-earning balances. The company’s ability to optimize funding costs and redeploy assets efficiently underpins the forecasted EPS acceleration to 1.38, suggesting that modest improvements in net interest margin can translate into meaningful earnings expansion.
A supportive backdrop from client engagement, including healthy new-to-firm accounts and consistent asset retention, adds visibility to the revenue base. Should market levels into quarter-end hold, the fee backdrop strengthens the combined revenue mix, smoothing volatility and enabling net interest value to flow through to EBIT with high incremental margins.
Key stock-price drivers this quarter
Earnings sensitivity to funding costs and deposit behavior will likely dominate the stock’s near-term path, as investors parse the trajectory of client cash normalization and the resultant net interest margin. Delivery against the consensus Revenue of 6.37 billion and EPS of 1.38 will be evaluated alongside commentary on balance sheet composition, deposit betas, and pace of reinvestment in securities. Equity market levels and customer activity impact asset management and trading revenues at the margin, potentially amplifying or dampening the earnings algorithm depending on quarter-end conditions.
Expense management remains a focal point, with investors expecting operating leverage to persist after last quarter’s beat on EBIT and EPS. Finally, any updated commentary on capital deployment, capital buffers, and balance sheet resiliency can influence valuation, given the sector’s sensitivity to perceived funding strength and interest-rate path.
Analyst Opinions
Recent institutional previews skew constructive, emphasizing improving operating leverage and a more benign deposit backdrop that support the step-up to Revenue of 6.37 billion and EPS of 1.38 for the quarter. Positive stances highlight that last quarter’s outperformance on EBIT of 3.15 billion and adjusted EPS of 1.31 sets a higher base, with consensus expecting continued progress in margin translation as rate and funding conditions stabilize.
Commentary also points to a healthier fee environment with steady asset management and administration revenues, framing a balanced multi-engine model rather than a single-factor rate trade. The majority view anticipates resilience in net interest value and improving year-over-year growth trajectories across headline metrics, viewing potential variability in trading revenue as manageable within the broader revenue mix. The bullish tilt centers on durable profitability, strong gross margin mechanics, and the prospect of incremental capital flexibility if earnings keep compounding in line with forecasts.Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
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