Why Is Charles Schwab (SCHW) Down 9.8% Since Last Earnings Report?

Core Viewpoint - The Charles Schwab Corporation reported strong fourth-quarter earnings, beating estimates, but shares have underperformed the S&P 500 in the past month, raising questions about future performance [1][2]. Financial Performance - Schwab's Q4 2025 adjusted earnings were $1.39 per share, exceeding the Zacks Consensus Estimate of $1.37, and reflecting a 38% year-over-year increase [3]. - Net income on a GAAP basis was $2.46 billion, or $1.33 per share, up from $1.84 billion, or 94 cents per share, in the same quarter last year [4]. - Quarterly net revenues reached a record $6.33 billion, a 19% increase year-over-year, driven by higher net interest revenue (NIR) up 25%, trading revenue up 22%, and asset management fees up 15% [5]. Expense and Profitability Metrics - Total non-interest expenses increased 4% to $3.16 billion, while adjusted total expenses rose 6% year-over-year to $3.03 billion [6]. - The pre-tax profit margin improved to 50.2% from 43.3% in the prior-year quarter [6]. Client and Asset Growth - As of December 31, 2025, Schwab's total client assets reached a record $11.9 trillion, an 18% increase year-over-year [7]. - The company added 1.27 million new brokerage accounts during the quarter, bringing the total to 38.5 million active brokerage accounts [7]. Share Repurchase Activity - Schwab repurchased 29.2 million shares for $2.7 billion during the reported quarter [8]. 2026 Outlook - Management anticipates revenue growth of 9.5-10.5% for 2026, with adjusted earnings expected to be in the range of $5.70-$5.80 per share, reflecting upper teens growth year-over-year [10][13]. - The company expects NIM to be between 2.85% and 2.95% and average interest-earning assets to grow modestly [11]. Market Position and Estimates - Since the earnings release, there has been an upward trend in fresh estimates for Schwab, leading to a Zacks Rank 2 (Buy) [14][16]. - The stock has a strong aggregate VGM Score of A, indicating favorable growth and momentum metrics [15]. Industry Comparison - In comparison, JPMorgan Chase & Co. reported revenues of $45.8 billion for the last quarter, with a year-over-year change of +7.1%, and has a Zacks Rank 3 (Hold) [17].