Is Charles Schwab (SCHW) At An Attractive Price After The Recent Pullback

Simply Wall St

Wed, February 18, 2026 at 5:10 PM GMT+9 6 min read

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•                                       StockStory Top Pick 
  

  SCHW

  -0.68%

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If you are wondering whether Charles Schwab is attractively priced today, the key question is how its current share price lines up with its underlying fundamentals.

After a last close of US$93.08, the stock has recently seen a 6.2% decline over 7 days and a 10.3% decline over 30 days, while still showing returns of 15.6% over 1 year, 21.7% over 3 years and 58.6% over 5 years.

Recent coverage has focused on how large diversified financial players like Charles Schwab are adapting to changing client behavior, product mix and competitive pressure. These factors can affect how investors think about risk and growth. Together, they provide useful context when you look at both the shorter term pullback and the longer term returns.

On our valuation checks, Charles Schwab scores 4 out of 6, and you can see the breakdown in our valuation score. Next, we walk through the main valuation approaches investors often use, then finish with a way to tie them together into a clearer view of the stock.

Charles Schwab delivered 15.6% returns over the last year. See how this stacks up to the rest of the Capital Markets industry.

Approach 1: Charles Schwab Excess Returns Analysis

The Excess Returns model looks at how much profit a company is expected to earn above the return that shareholders require, then adds that value to its book value per share. In simple terms, it asks whether Charles Schwab is using its equity base productively enough to justify a higher share price.

For Charles Schwab, the model uses a Book Value of US$23.85 per share and a Stable EPS of US$6.59 per share, based on weighted future Return on Equity estimates from 7 analysts. The implied Cost of Equity is US$2.65 per share, which leaves an Excess Return of US$3.93 per share. That is supported by an Average Return on Equity of 21.13% and a Stable Book Value estimate of US$31.18 per share from 6 analysts.

Combining these inputs, the Excess Returns model arrives at an intrinsic value of about US$108.22 per share. Against the recent share price of US$93.08, this suggests the stock is around 14.0% undervalued on this method.

Result: UNDERVALUED

Our Excess Returns analysis suggests Charles Schwab is undervalued by 14.0%. Track this in your watchlist or portfolio, or discover 56 more high quality undervalued stocks.

SCHW Discounted Cash Flow as at Feb 2026

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Charles Schwab.

Story Continues  

Approach 2: Charles Schwab Price vs Earnings

For a profitable company like Charles Schwab, the P/E ratio is a straightforward way to connect what you pay per share with the earnings that support that price. It helps you see how much the market is currently willing to pay for each dollar of earnings.

What counts as a “fair” P/E usually reflects two big ideas: how quickly earnings are expected to grow and how risky those earnings are. Higher growth or lower perceived risk can justify a higher multiple, while slower growth or higher risk typically argues for a lower one.

Charles Schwab currently trades on a P/E of 19.65x. That sits below the Capital Markets industry average P/E of 23.10x and also below the peer group average of 20.60x. Simply Wall St’s Fair Ratio for Charles Schwab is 19.01x. This Fair Ratio is a proprietary estimate of what the P/E “should” be, based on factors such as earnings growth, industry, profit margin, market cap and company specific risks. Because it blends these fundamentals, it can be more tailored than a simple comparison with peers or the broader industry.

Comparing the current P/E of 19.65x to the Fair Ratio of 19.01x suggests the shares are slightly above that fair level, pointing to a mild degree of overvaluation on this measure.

Result: OVERVALUED

NYSE:SCHW P/E Ratio as at Feb 2026

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Upgrade Your Decision Making: Choose your Charles Schwab Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which are simply your story about Charles Schwab tied to your own numbers for future revenue, earnings, margins and fair value, then compared with the current price so you can decide how closely the market matches your view.

On Simply Wall St’s Community page, Narratives turn that story into a financial forecast and a fair value estimate, then keep it updated automatically when new information like news or earnings arrives, so you are always looking at a view that reflects the latest data rather than a static snapshot.

For Charles Schwab, one investor might align with the more optimistic Narrative that points to a fair value around US$140.82 per share, while another might lean toward the more cautious Narrative closer to US$88.00 per share. Seeing that spread helps you decide where your own expectations sit on that spectrum.

For Charles Schwab, however, we will make it really easy for you with previews of two leading Charles Schwab Narratives:

🐂 Charles Schwab Bull Case

Fair value: US$122.76

Valuation gap: about 24.2% below this fair value based on the last close of US$93.08

Revenue growth assumption: 10.76%

Frames Schwab as a scale business built on multiple revenue streams, where brokerage, asset management, advisory and banking together help support earnings through different market cycles.

Emphasizes sticky client assets, cost discipline and existing infrastructure as key supports for margins and operating leverage as conditions evolve over time.

Sees the current pricing as cautious rather than exuberant, with the long term story focused on patient compounding as more individuals engage with markets and Schwab’s platform.

🐻 Charles Schwab Bear Case

Fair value: US$88.00

Valuation gap: about 5.8% above this fair value based on the last close of US$93.08

Revenue growth assumption: 9.23%

Highlights the risk that higher ongoing spending on technology, AI and new products could keep costs elevated and put pressure on margins even if revenues continue to rise.

Flags reliance on strong markets, margin lending and pledged asset lines as potential weak spots if trading activity cools, rates move differently to expectations or credit conditions tighten.

Anchors on a US$88.00 fair value that sits toward the lower end of analyst expectations, asking you to test whether more cautious assumptions on future earnings and P/E multiples feel more realistic to you.

Between these two views, you can decide which set of assumptions lines up better with how you see Charles Schwab’s business, risk profile and the price you are comfortable paying today. If you want to go deeper, you can build and track your own Narrative using the same types of inputs around revenue, margins and valuation.

Do you think there’s more to the story for Charles Schwab? Head over to our Community to see what others are saying!

NYSE:SCHW 1-Year Stock Price Chart

_ This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned._

Companies discussed in this article include SCHW.

Have feedback on this article? Concerned about the content? Get in touch with us directly._ Alternatively, email editorial-team@simplywallst.com_

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