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Schwab Gains 31.9% YTD: Should You Buy the Stock Right Now?
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Key Takeaways
Schwab shares have risen 31.9% YTD, beating the broader market but trailing Robinhood and Interactive Brokers.
Higher rates and reduced funding costs boosted NIM to 2.59% in 1H25, with further gains expected.
Client assets have surged via acquisitions and market gains, supporting double-digit revenue growth.
The Charles Schwab Corporation’s (SCHW - Free Report) shares have rallied 31.9% so far this year, outperforming the S&P 500 Index’s 8.5% growth and the industry’s 20.4% rise. The stock has underperformed its close peers Robinhood Markets (HOOD - Free Report) and Interactive Brokers (IBKR - Free Report) . In the same time frame, HOOD shares have skyrocketed 204.9% and the IBKR stock has gained 49.8%.
YTD Price Performance of SCHW
Image Source: Zacks Investment Research
Schwab has been benefiting from heightened market volatility of late. The brokerage firm reported a year-over-year rise in trading revenues in the first half of 2025, driven by growth in client trading volume. Higher equity market volatility has also benefited Robinhood and Interactive Brokers this year.
Since the beginning of this year, Schwab’s performance has reflected strong asset gathering, sustained client engagement and equity market appreciation, continued demand for margin and bank lending, reduction of higher-cost bank supplemental funding, as well as balanced expense management.
Thus, let us decipher whether it makes sense to add the SCHW stock to your portfolio now, given the recent increase in price.
Factors Supporting SCHW’s Growth
Improving Net Interest Margin (NIM): Amid the relatively high interest-rate environment, Schwab’s NIM has been increasing. Along with higher rates, Schwab’s focus on repaying high-cost bank supplemental funding balances has been supporting growth. By June 2025-end, the bank's supplemental funding balance had plummeted 70% to $27.7 billion from the peak of $97.1 billion in May 2023.
Driven by this, NIM increased to 2.59% in the first half of 2025 from 2.03% in the prior-year period. The metric recorded an improving trend in the prior years as well. SCHW’s NIM rose to 2.12% in 2024 from 1.98% in 2023, 1.78% in 2022 and 1.45% in 2021.
Similarly, the company’s net interest revenue (NIR) has been witnessing an increasing trend of late. While NIR declined in 2023 and 2024, the metric increased 25.9% year over year to $5.53 billion in the first six months of 2025. Growth was aided by lower interest expenses from the reduction in funding balances, along with a rise in bank lending, and higher cash and investments segregated.
Going forward, SCHW’s NIM and NIR will likely continue to improve, driven by higher rates and reduced funding costs.
Schwab expects NIM to be 2.65-2.75% by 2025-end, with fourth-quarter NIM expanding toward 2.80%.
Rise in Client Assets: SCHW continues to benefit from aggressive efforts to increase its client base in advisory solutions. The company’s total managed investing solutions revenues witnessed a compound annual growth rate (CAGR) of 12.2% over the last five years (2019-2024), with the uptrend continuing in the first half of 2025.
Schwab’s total client assets saw a CAGR of 20.1% over the same time frame, mainly driven by acquisitions completed during this period and market appreciation. The uptrend continued for total client assets in the first six months of 2025.
SCHW’s acquisition of TD Ameritrade has led to the formation of a behemoth in the brokerage industry. Moreover, the acquisitions of USAA’s Investment Management Company, Wasmer, Schroeder & Company, LLC, and the buyout of Motif’s technology and intellectual property have strengthened Schwab’s position and helped diversify revenues.
Despite the company lowering fees on certain investing solution products, revenues from the same have increased as average client asset balances improved. The uptrend is expected to continue in the near term. Strategic buyouts and favorable market conditions are likely to drive client assets, which will positively impact total revenue growth. The Zacks Consensus Estimate for Schwab’s 2025 revenues is $23.41 billion, which suggests a year-over-year rise of 19.4%.
Sales Estimates
Image Source: Zacks Investment Research
Analyst Sentiments Bullish for SCHW
Over the past 30 days, the Zacks Consensus Estimate for Schwab’s 2025 and 2026 earnings has been revised 4.6% and 4.7% upward, respectively. This reflects that analysts are optimistic regarding SCHW’s earnings growth potential.
Moreover, 2025 and 2026 earnings estimates of $4.59 per share and $5.40 per share reflect year-over-year growth rates of 41.2% and 17.7%, respectively.
Earnings Estimates
Image Source: Zacks Investment Research
Is it Wise to Add SCHW Stock to Your Portfolio Now?
Schwab’s inorganic growth initiatives and a rise in investing solution fees will keep aiding top-line growth in the quarters ahead. Moreover, the robust trading performance is expected to continue for some time in the near term as markets remain volatile, given that investors are trying to decipher the impact of Trump’s newly introduced tariffs on various sectors.
But, if we look at the stock’s current valuation, it appears to be overvalued than the industry. Schwab is currently trading at a trailing 12-month price/book (P/B) ratio of 4.40, which is above the industry average of 2.08.
SCHW’s Price-to-Book TTM
Image Source: Zacks Investment Research
Robinhood has a P/B ratio of 12.51, while Interactive Brokers has a P/B ratio of 6.04. While Schwab appears to be trading at a premium when compared with the industry on average, it is relatively inexpensive compared with its closest peers like Robinhood and Interactive Brokers.
Moreover, currently SCHW has a return on equity (ROE) of 19.3%, which is above the industry average of 11.89%, reflecting its superiority over its peers when it comes to utilizing shareholder funds. The strength in ROE also justifies the stock’s premium valuation.
SCHW’s Return on Equity
Image Source: Zacks Investment Research
Schwab has also been constantly rewarding shareholders with enhanced capital distributions. In January 2025, it announced an 8% hike in the quarterly dividend to 27 cents per share. In the past five years, the company has raised dividend payouts four times.
Also, SCHW announced a repurchase plan of $20 billion in July 2025, while signaling that the company will remain opportunistic in pursuing buybacks.
Thus, Schwab’s fundamental strength, along with its robust earnings and sales growth projections, and an impressive ROE suggest that it is worth adding the stock to your portfolio now despite being relatively expensive. Bullish analyst sentiments add another layer of optimism.
Image: Bigstock
Schwab Gains 31.9% YTD: Should You Buy the Stock Right Now?
Key Takeaways
The Charles Schwab Corporation’s (SCHW - Free Report) shares have rallied 31.9% so far this year, outperforming the S&P 500 Index’s 8.5% growth and the industry’s 20.4% rise. The stock has underperformed its close peers Robinhood Markets (HOOD - Free Report) and Interactive Brokers (IBKR - Free Report) . In the same time frame, HOOD shares have skyrocketed 204.9% and the IBKR stock has gained 49.8%.
YTD Price Performance of SCHW
Image Source: Zacks Investment Research
Schwab has been benefiting from heightened market volatility of late. The brokerage firm reported a year-over-year rise in trading revenues in the first half of 2025, driven by growth in client trading volume. Higher equity market volatility has also benefited Robinhood and Interactive Brokers this year.
Since the beginning of this year, Schwab’s performance has reflected strong asset gathering, sustained client engagement and equity market appreciation, continued demand for margin and bank lending, reduction of higher-cost bank supplemental funding, as well as balanced expense management.
Thus, let us decipher whether it makes sense to add the SCHW stock to your portfolio now, given the recent increase in price.
Factors Supporting SCHW’s Growth
Improving Net Interest Margin (NIM): Amid the relatively high interest-rate environment, Schwab’s NIM has been increasing. Along with higher rates, Schwab’s focus on repaying high-cost bank supplemental funding balances has been supporting growth. By June 2025-end, the bank's supplemental funding balance had plummeted 70% to $27.7 billion from the peak of $97.1 billion in May 2023.
Driven by this, NIM increased to 2.59% in the first half of 2025 from 2.03% in the prior-year period. The metric recorded an improving trend in the prior years as well. SCHW’s NIM rose to 2.12% in 2024 from 1.98% in 2023, 1.78% in 2022 and 1.45% in 2021.
Similarly, the company’s net interest revenue (NIR) has been witnessing an increasing trend of late. While NIR declined in 2023 and 2024, the metric increased 25.9% year over year to $5.53 billion in the first six months of 2025. Growth was aided by lower interest expenses from the reduction in funding balances, along with a rise in bank lending, and higher cash and investments segregated.
Going forward, SCHW’s NIM and NIR will likely continue to improve, driven by higher rates and reduced funding costs.
Schwab expects NIM to be 2.65-2.75% by 2025-end, with fourth-quarter NIM expanding toward 2.80%.
Rise in Client Assets: SCHW continues to benefit from aggressive efforts to increase its client base in advisory solutions. The company’s total managed investing solutions revenues witnessed a compound annual growth rate (CAGR) of 12.2% over the last five years (2019-2024), with the uptrend continuing in the first half of 2025.
Schwab’s total client assets saw a CAGR of 20.1% over the same time frame, mainly driven by acquisitions completed during this period and market appreciation. The uptrend continued for total client assets in the first six months of 2025.
SCHW’s acquisition of TD Ameritrade has led to the formation of a behemoth in the brokerage industry. Moreover, the acquisitions of USAA’s Investment Management Company, Wasmer, Schroeder & Company, LLC, and the buyout of Motif’s technology and intellectual property have strengthened Schwab’s position and helped diversify revenues.
Despite the company lowering fees on certain investing solution products, revenues from the same have increased as average client asset balances improved. The uptrend is expected to continue in the near term. Strategic buyouts and favorable market conditions are likely to drive client assets, which will positively impact total revenue growth. The Zacks Consensus Estimate for Schwab’s 2025 revenues is $23.41 billion, which suggests a year-over-year rise of 19.4%.
Sales Estimates
Image Source: Zacks Investment Research
Analyst Sentiments Bullish for SCHW
Over the past 30 days, the Zacks Consensus Estimate for Schwab’s 2025 and 2026 earnings has been revised 4.6% and 4.7% upward, respectively. This reflects that analysts are optimistic regarding SCHW’s earnings growth potential.
Moreover, 2025 and 2026 earnings estimates of $4.59 per share and $5.40 per share reflect year-over-year growth rates of 41.2% and 17.7%, respectively.
Earnings Estimates
Image Source: Zacks Investment Research
Is it Wise to Add SCHW Stock to Your Portfolio Now?
Schwab’s inorganic growth initiatives and a rise in investing solution fees will keep aiding top-line growth in the quarters ahead. Moreover, the robust trading performance is expected to continue for some time in the near term as markets remain volatile, given that investors are trying to decipher the impact of Trump’s newly introduced tariffs on various sectors.
But, if we look at the stock’s current valuation, it appears to be overvalued than the industry. Schwab is currently trading at a trailing 12-month price/book (P/B) ratio of 4.40, which is above the industry average of 2.08.
SCHW’s Price-to-Book TTM
Image Source: Zacks Investment Research
Robinhood has a P/B ratio of 12.51, while Interactive Brokers has a P/B ratio of 6.04. While Schwab appears to be trading at a premium when compared with the industry on average, it is relatively inexpensive compared with its closest peers like Robinhood and Interactive Brokers.
Moreover, currently SCHW has a return on equity (ROE) of 19.3%, which is above the industry average of 11.89%, reflecting its superiority over its peers when it comes to utilizing shareholder funds. The strength in ROE also justifies the stock’s premium valuation.
SCHW’s Return on Equity
Image Source: Zacks Investment Research
Schwab has also been constantly rewarding shareholders with enhanced capital distributions. In January 2025, it announced an 8% hike in the quarterly dividend to 27 cents per share. In the past five years, the company has raised dividend payouts four times.
Also, SCHW announced a repurchase plan of $20 billion in July 2025, while signaling that the company will remain opportunistic in pursuing buybacks.
Thus, Schwab’s fundamental strength, along with its robust earnings and sales growth projections, and an impressive ROE suggest that it is worth adding the stock to your portfolio now despite being relatively expensive. Bullish analyst sentiments add another layer of optimism.
Currently, Schwab sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.