Signal Ledger LabSignal Ledger valuation · SCHW
Charles Schwab Corp
What the shares are worth today on our research (cited consensus, company plans and peers, since management sets no usable targets): every line valued at the end of FY2030, net debt rolled forward, then discounted back to Jun 30, 2026.
- Business value at FY2030
- $126B
- FY2030 net income
- $9B
- FY2030 EPS · P/E
- $5.23 · 14×
- Discount rate (WACC · equity)
- 8.17% · 8.17%
How this is built. No dated management ROE/ROTCE target was verified; a capital-dependent brokerage/bank uses reported FY2025 common ROE and common book equity under the financial residual-income rules, rather than converting through-cycle EPS aspirations into an unsupported return target. Each input below shows its basis: consensus, company plan, peer or rule.
Latest quarter in this research: Q3 FY2026
Reported Oct 15, 2026 for the quarter to Sep 30, 2026 (company release ↗). This valuation already reflects these results (researched Oct 23, 2026).
- Reported pretax income after funding costs/provisions was $3.777B; operatingIncomeB is null because bank pretax income is not industrial EBIT. Source: https://www.sec.gov/Archives/edgar/data/316709/000031670926000035/a3q26exhibit991.htm
- Net revenue +17%; net income available to common $2.811B after $0.095B preferred dividends/other.
- Core net new assets $190.4B; customer assets $13.33T are not shareholder equity.
- Release does not disclose separate Investor Services/Advisor Services quarterly revenue and profit; no fabricated segment allocation.
What each business is worth
| Business | Model | FY2030 revenue | Value today | Per share | 2030 multiple | Value from beyond FY2030 |
|---|---|---|---|---|---|---|
| Schwab brokerage and banking · firm-wideBrokerage and banking | Return on equity (residual income) | — | $122B | $70.42 | 2.9× P/B | 37% |
| All businesses | — | $122B | $70.42 |
From 2030 back to today
- Enterprise value at end of FY2030$126B
- Less net debt at FY2030$0B
- Equity value at FY2030$126B
- ÷ (1 + 8.17%)^4.5 years at the cost of equity$89B
- + dividends paid on the way, discounted$33B
This reconciliation checks the published Signal Ledger valuation against the net-debt path. The difference is 0.0%, inside our 5% tolerance.
From businesses to one share
- All businesses, valued today$122B
- − borrowings$0B
- − finance leases$0B
- + cash and short-term investments$0B
- ÷ diluted shares1.729B
- Signal Ledger valuation$70.42
Valued on common equity: a financial company's deposits, borrowings, cash and preferred stock are part of the balance sheet it earns its return on, so they are not deducted again.
Year by year to FY2030
| Fiscal year | Revenue | EBITDA | Capex | Free cash flow | Net debt at year end |
|---|---|---|---|---|---|
| FY2026 | $0B | $11B | $0B | $9B | $0B |
| FY2027 | $0B | $11B | $0B | $9B | $0B |
| FY2028 | $0B | $11B | $0B | $9B | $0B |
| FY2029 | $0B | $11B | $0B | $9B | $0B |
| FY2030 | $0B | $11B | $0B | $9B | $0B |
What must be true
- The company spends $0.0B of capital expenditure through FY2030.
- The company stays net cash throughout (lowest point $0.0B of net cash in FY2025).
- Schwab brokerage and banking · firm-wide keeps earning 20.6% on its equity, against a 8.17% cost of equity.
What the price implies
Joint sales and margin requirements do not apply to this financial model.
At the research price of $91.44 (2026-10-23), the price asks more than our assumptions overall. These are operating requirements at that price, not additional valuations or forecasts.
- Implied discount rate
- 6.7%
- All-business FY2030 sales factor
- —
The WACC that makes model value equal the price, shifting WACC and cost of equity by the same amount. Model: 8.2% WACC · 8.2% cost of equity.
This model has no margin or capacity revenue paths to scale. FY1 stays fixed; the sales change ramps to FY2030 and stays at that factor thereafter.
Single-business sales and margin comparisons do not apply to asset, financial, project or REIT valuation lines.
Mechanical requirements, not forecasts. The separate sales-only and single-business factors are searched from 0.1× to 6×; an unsolved comparison means this business alone cannot get there within those bounds. Single-business revenue changes apply from FY2 onward; margin changes scale the full EBIT or EBITDA margin path. Mixed groups show revenue-weighted EBIT and EBITDA margins separately. Requirements above 100% are not feasible margins. Joint rows instead search non-negative uniform margin factors only up to the EBIT/EBITDA guardrails; the entire margin path scales, including post-FY2030 convergence. Sales and margins change together only in that table. The rate search runs from the largest terminal growth rate plus 0.5 percentage points to 30% WACC.
The discount rate
- Cost of equity
- 8.17%
- WACC
- 8.17%
- 10-year Treasury · model / spot
- 3.87% · 5.13%
r_f 3.87% (5-year average 10-year Treasury yield 3.87% (spot 5.13% on 2026-10-21)) + β 0.86 after Blume adjustment × 5%, rounded to 0.01% (1bp)
methodology §4.5: market-weighted WACC, not rounded
The model uses the recorded 5-year average Treasury yield. The spot yield is shown for context.
Every input, with its source
Show 13 inputs · reported, guidance and rule-based
| Input | Value | Basis | Why |
|---|---|---|---|
| Common equitySchwab brokerage and banking · firm-wide | $43.9B | Reported | June 2026 GAAP stockholders equity $50.147B less preferred carrying equity $6.213B = common equity $43.934B. Evidence preferred $6.315B is a different claim measure; do not mix liquidation with GAAP common book. sec.gov ↗ |
| Return on equity FY2026Schwab brokerage and banking · firm-wide | 20.6% | Reported | FY2025 net income available to common $8.417B / reported average common stockholders equity $40.923B. Use common ROE, not adjusted ROTCE 38% against unadjusted equity. sec.gov ↗ |
| Return on equity FY2030Schwab brokerage and banking · firm-wide | 20.6% | Reported | latest return held without a management target (methodology §4.6) sec.gov ↗ |
| Payout ratioSchwab brokerage and banking · firm-wide | 100.0% | Rule | Legacy research assumption of 100% recurring payout, not a reported value and not management guidance. FY2025 reported common dividends 1.958B plus common/nonvoting repurchases 7.346B over common earnings 8.417B =110.5381965071%. This cap conflicts with current methodology 3.7.2; a finite excess-capital budget, floor and duration require an owner decision. Review report proposes inputs without adopting a new discretionary payoutTransition. sec.gov ↗ |
| Terminal growthSchwab brokerage and banking · firm-wide | 2.0% | Rule | methodology §4.2 terminal growth for a mature line Valuation methodology §4.2 · Read methodology ↗ |
| WACCDiscount rates | 8.17% | Rule | methodology §4.5: market-weighted WACC, not rounded FRED DGS10 2021-10-20..2026-10-21 |
| Cost of equityDiscount rates | 8.17% | Rule | r_f 3.87% (5-year average 10-year Treasury yield 3.87% (spot 5.13% on 2026-10-21)) + β 0.86 after Blume adjustment × 5%, rounded to 0.01% (1bp) 60 monthly returns vs SPY, 2021-09..2026-09 (adjusted closes) |
| Tax rateDiscount rates | 19.5% | Reported | Three-year cash-tax/pretax-income mean: 1.575/11.459, 1.491/7.692, 1.62/6.378. Financial ROE is already after tax; rate does not tax it a second time. sec.gov ↗ |
| Cash and short-term investmentsBalance sheet | $0.0B | Reported | cash: inside the common equity the financial line is valued on (methodology §3.7) balance sheet 2026-06-30 |
| BorrowingsBalance sheet | $0.0B | Reported | borrowings and deposits: inside the common equity the financial line is valued on (methodology §3.7) balance sheet 2026-06-30 |
| Finance leasesBalance sheet | $0.0B | Reported | finance leases: inside the common equity the financial line is valued on (methodology §3.7) balance sheet 2026-06-30 |
| SharesBalance sheet | 1.729B | Reported | shares outstanding as of 2026-07-31 cover page of 10-Q 0000316709-26-000031 |
| Dividends per yearShareholders | $0.0B | Rule | No standalone dividend bridge under financial plugin; common distributions come from payoutRatio.: paid out of the financial line's earnings at its payout ratio (methodology §3.7) sec.gov ↗ |
Research notes
- share-count comparison: 1.739B quarter 2026-04-01..2026-06-30 · 0000316709-26-000031; point-in-time denominator retained
- valued on common equity (financial lines): cash, borrowings, deposits and preferred are inside it, not deducted again; dividends come from the payout ratio
- cost of equity 8.17% (β 0.86 after Blume adjustment), WACC 8.2%
- Schwab brokerage and banking · firm-wide: residual income on $43.9B of common equity, earnings = ROE × equity, payout 100% (methodology §3.7)
Signal Ledger research built from cited consensus, company plans and peer economics because management sets no usable targets — not a forecast and not investment advice. The research desk (GPT-6.1 (Codex)) gathers filings, guidance and targets; deterministic code applies the samepublished rules to every company and checks the result. Inputs may contain errors; follow the source links before relying on them. Read our valuation methodology →