MMarketMath

SCHW

Fast growerQuality: High (80/100)2 red flags

Charles Schwab Corporation · Financials · Investment Banking & Brokerage

$113.65

52w 83.96 – 114.53

20y monthly, adjusted

Mkt cap

$196.5B

P/E

21.9

P/FCF

22.2

FCF yield

4.5%

ROE

17.9%

Shldr yield

5.0%

div 1.2% + bb 3.8%

What today's price assumes

At $196.5B, the market is pricing in 9.1% annual free-cash-flow growth for the next decade (10% discount rate, 2.5% terminal growth). Over the last ten years, FCF actually grew 24.5% per year — expectations look undemanding relative to history.

Simple DCF per-share range: $77 · $173 · $250 (4% / base / optimistic growth). An estimate, not a target.

Adjust the assumptions yourself →

Historical multiple lens

At its own median P/OCF of 13.5× across 17 years, SCHW would trade near $73/share (25th–75th percentile: $54–$128); it trades at 21.1× today.

Assumes the historical multiple regime persists — re-ratings can be permanent.

Growth record

Compound annual growth rates from as-filed 10-K data, split-adjusted

Rev 3y

+4.8%

Rev 5y

+15.4%

Rev 10y

+14.1%

EPS 5y

+17.0%

EPS 10y

+16.3%

FCF 5y

+7.1%

FCF 10y

+24.5%

Fundamentals

Fiscal 2007–2025, from SEC filings

Revenue

2007: $5.0B
2008: $5.2B
2009: $4.2B
2010: $4.2B
2011: $4.7B
2012: $4.9B
2013: $5.4B
2014: $6.1B
2015: $6.4B
2016: $7.5B
2017: $8.6B
2018: $10.1B
2019: $10.7B
2020: $11.7B
2021: $18.5B
2022: $20.8B
2023: $18.8B
2024: $19.6B
2025: $23.9B
$0$10.0B$20.0B
07
11
15
19
23

Net income

2007: $2.4B
2008: $1.2B
2009: $787.0M
2010: $454.0M
2011: $864.0M
2012: $928.0M
2013: $1.1B
2014: $1.3B
2015: $1.4B
2016: $1.9B
2017: $2.4B
2018: $3.5B
2019: $3.7B
2020: $3.3B
2021: $5.9B
2022: $7.2B
2023: $5.1B
2024: $5.9B
2025: $8.9B
$0$2.5B$5.0B$7.5B
07
11
15
19
23

Free cash flow

2007: $1.6B
2008: −$186.0M
2009: $1.3B
2010: −$138.0M
2011: $2.3B
2012: $1.1B
2013: $1.4B
2014: $1.9B
2015: $980.0M
2016: $3.3B
2017: −$1.2B
2018: $11.9B
2019: $8.6B
2020: $6.2B
2021: $1.2B
2022: $1.1B
2023: $18.9B
2024: $2.0B
2025: $8.8B
$0$10.0B
07
11
15
19
23

Diluted shares (lower is better)

2007: 1.2B
2008: 1.2B
2009: 1.2B
2010: 1.2B
2011: 1.2B
2012: 1.3B
2013: 1.3B
2014: 1.3B
2015: 1.3B
2016: 1.3B
2017: 1.4B
2018: 1.4B
2019: 1.3B
2020: 1.4B
2021: 1.9B
2022: 1.9B
2023: 1.8B
2024: 1.8B
2025: 1.8B
0500.0M1.0B1.5B
07
11
15
19
23

Margins

0%50%100%07101316192225
Net marginFCF margin

Capital returned (dividends + buybacks)

2007: $4.2B
2008: $603.0M
2009: $279.0M
2010: $288.0M
2011: $295.0M
2012: $337.0M
2013: $368.0M
2014: $373.0M
2015: $387.0M
2016: $486.0M
2017: $592.0M
2018: $1.8B
2019: $3.3B
2020: $1.3B
2021: $1.8B
2022: $5.5B
2023: $5.1B
2024: $2.3B
2025: $9.7B
$0$2.5B$5.0B$7.5B
07
11
15
19
23

Cash vs long-term debt

$0$20.0B$40.0B$60.0B07101316192225
CashLT debt

Quarterly

Discrete quarters from 10-Q filings; Q4 derived as fiscal year minus Q1–Q3. OCF is unwound from the year-to-date figures 10-Qs report. Compare to the same quarter a year ago — most businesses are seasonal.

Revenue by quarter

Q2'23: $4.7B
Q3'23: $4.6B
Q4'23: $4.5B
Q1'24: $4.7B
Q2'24: $4.7B
Q3'24: $4.8B
Q4'24: $5.3B
Q1'25: $5.6B
Q2'25: $5.9B
Q3'25: $6.1B
Q4'25: $6.3B
Q1'26: $6.5B
Q2'26: $7.1B
$0$2.0B$4.0B$6.0B
23
24
24
25
26

Net income by quarter

Q2'23: $1.3B
Q3'23: $1.1B
Q4'23: $1.0B
Q1'24: $1.4B
Q2'24: $1.3B
Q3'24: $1.4B
Q4'24: $1.8B
Q1'25: $1.9B
Q2'25: $2.1B
Q3'25: $2.4B
Q4'25: $2.5B
Q1'26: $2.5B
Q2'26: $2.8B
$0$1.0B$2.0B
23
24
24
25
26
QuarterRevenueYoYNet incomeYoYEPSOCF
Q2'26$7.1B+20.9%$2.8B+31.7%1.54$4.3B
Q1'26$6.5B+15.8%$2.5B+29.9%1.37$7.3B
Q4'25 *$6.3B+18.9%$2.5B+33.6%1.32−$763.0M
Q3'25$6.1B+26.6%$2.4B+67.5%1.26$538.0M
Q2'25$5.9B+24.8%$2.1B+59.6%1.08$3.2B
Q1'25$5.6B+18.1%$1.9B+40.2%0.99$6.4B
Q4'24 *$5.3B+19.5%$1.8B+76.1%0.94−$10.8B
Q3'24$4.8B+5.2%$1.4B+25.2%0.71$19.1B
Q2'24$4.7B+0.7%$1.3B+2.9%0.66−$4.3B
Q1'24$4.7B−7.3%$1.4B−15.0%0.68−$1.3B
Q4'23 *$4.5B−18.9%$1.0B−46.9%0.51$20.0B
Q3'23$4.6B−16.3%$1.1B−44.3%0.56−$5.0B
Q2'23$4.7B−8.6%$1.3B−27.8%0.64−$5.2B

Track record

Compound annual growth by period. For debt and share count, negative is the good direction.

Series3y5y10y15y
Revenue+4.8%+15.4%+14.1%+12.2%
Operating cash flow+65.4%+6.3%+22.3%+12.4%
Free cash flow+100.6%+7.1%+24.5%+12.7%
EPS (diluted)+9.9%+17.0%+16.3%+18.2%
Equity+10.5%−2.5%+13.9%+14.8%
LT debt+2.1%+10.2%+22.7%+17.4%
Diluted shares−1.5%+4.7%+3.1%+2.8%
Stock price+25.9%+10.7%+15.1%+17.4%

$100, 3 years ago

$200vs $176 in SPY

25.9% vs 20.7%/yr

$100, 5 years ago

$166vs $181 in SPY

10.7% vs 12.6%/yr

$100, 10 years ago

$409vs $412 in SPY

15.1% vs 15.2%/yr

$100, 15 years ago

$1,107vs $813 in SPY

17.4% vs 15.0%/yr

The $1 test — market value created per $1 of earnings retained (Buffett's hurdle: at least $1)

Last 5 years

$5.34

$117.9B created / $22.1B retained

Last 10 years

$4.81

$157.0B created / $32.6B retained

Quality & capital discipline

Cash-based returns and how management deploys capital

Cash ROIC

13.0%

OCF ÷ (equity + debt)

OCF / EV yield

5.5%

MC vs 10× OCF

2.09

≤1 = priced under 10× OCF

Debt / FCF

2.5y

SBC / FCF

3.6%

Owner earnings

$8.4B

OCF − capex − SBC

OE yield

4.3%

Share count 5y

+2.2%

per year; negative = buybacks

Checklist

20 of 24 checks pass · 83%. Checks with structurally missing inputs are excluded.

Growth & Consistency

6/7

  • Revenue growth

    15.4% · 5y CAGR ≥ 5%

    pass

  • EPS growth

    17.0% · 5y CAGR ≥ 5%

    pass

  • FCF growth

    7.1% · 5y CAGR ≥ 5%

    pass

  • Revenue rises consistently

    8 of 9 · up in ≥ 7 of last 10 years

    pass

  • FCF consistently positive

    9 of 10 · positive in ≥ 8 of last 10 years

    pass

  • Profitable every year

    10 of 10 · net income > 0 in ≥ 8 of last 10

    pass

  • Cash flow keeps up with sales

    6.3% vs 15.4% · OCF CAGR ≥ 0.9× revenue CAGR

    fail

Profitability

5/5

  • Net margin

    37.0% · ≥ 8%

    pass

  • Operating margin

    — · ≥ 10%

    na

  • Gross margin stable or rising

    — · no drop > 2 pts over 3y

    na

  • Return on equity

    17.9% · ≥ 12%

    pass

  • Cash ROIC

    13.0% · ≥ 12%

    pass

  • FCF margin

    36.6% · ≥ 5%

    pass

  • Earnings back their cash

    OCF $9.3B vs NI $8.9B · OCF ≥ net income (latest FY)

    pass

Balance Sheet

3/4

  • Debt payable from cash flow

    2.5y · LT debt ≤ 3× FCF

    pass

  • Cash cushion

    207% · cash ≥ 50% of LT debt

    pass

  • Leverage

    0.45 · LT debt ≤ 1.5× equity

    pass

  • Equity positive and compounding

    $49.4B · equity > 0 and grew over ~5y

    fail

  • Interest burden

    — · interest ≤ 15% of operating income

    na

Capital Allocation

2/4

  • Share count flat or shrinking

    2.2% · ≤ +0.5%/yr over ~5y

    fail

  • Stock comp restrained

    4% · SBC ≤ 15% of FCF

    pass

  • Distributions funded by FCF

    110% · dividends + buybacks ≤ 100% of FCF

    fail

  • Repurchases are a habit

    5 of 10 · buybacks in ≥ 5 of last 10 years

    pass

Valuation Discipline

4/4

  • FCF yield

    4.5% · ≥ 3%

    pass

  • Earnings multiple

    21.9 · P/E ≤ 25

    pass

  • Price asks less than history delivered

    9.1% vs 24.5% · implied FCF growth ≤ historical FCF CAGR

    pass

  • Shareholder yield

    5.0% · dividends + buybacks ≥ 2% of market cap

    pass

Red flags

Mechanical checks — a flag is a question to investigate, not a verdict

Shareholder dilution

Diluted share count has grown by more than 2% per year over ~5 years.

Distributions exceed FCF

Dividends plus buybacks exceeded free cash flow in the latest fiscal year.

Financial data

As filed in 10-Ks; per-share figures split-adjusted. $ in millions.

FYRevenueGross profitOp incomeNet incomeEPSOCFCapExFCFDividendsBuybacksSBCCashLT debtEquityShares
202523,921——8,8524.659,3115488,7632,3297,34631746,03022,19949,4251,809
202419,606——5,9422.992,6706202,0502,275033742,08322,42848,3751,834
202318,837——5,0672.5419,58770018,8872,2762,84232043,33726,12840,9581,831
202220,762——7,1833.502,0579711,0862,1103,39536640,19520,82836,6081,894
202118,520——5,8552.832,1189161,2021,822025462,97518,91456,2611,897
202011,691——3,2992.126,8526316,2211,280020440,34813,63256,0601,435
201910,721——3,7042.679,3257088,6171,0602,22018329,3457,43021,7451,320
201810,132——3,5072.4512,45657011,8867871,00019727,9386,87820,6701,361
20178,618——2,3541.61-839400-1,239592015314,2174,75318,5251,353
20167,478——1,8891.313,6033463,257486014110,8282,87616,4211,334
20156,380——1,4471.031,246266980387—13511,9782,87713,4021,327
20146,058——1,3210.952,3484001,948373—11511,3631,89911,8031,315
20135,435——1,0710.781,6562491,407368—1167,7281,90310,3811,293
20124,883——9280.691,2661481,118337—10512,6631,6329,5891,275
20114,691——8640.702,4641802,284295—998,6792,0017,7141,229
20104,248——4540.38-9129-138288—874,9312,0066,2261,194
20094,193——7870.681,4371401,2972790758,2411,5125,0731,160
20085,150——1,2121.052188-186253350695,4428834,0611,157
20074,994——2,4071.961,7461681,5781,5002,742586,764—3,7321,222

Some concepts are structurally absent for certain industries (banks report no gross profit or capex). Missing ≠ zero.

Compare with peers →·10-K filings on EDGAR ↗