The Charles Schwab Corporation (SCHW) Stock Analysis — Fair Value, Risk & Moat Rating
NYQ · Financial Services · Capital Markets
Is The Charles Schwab Corporation a safe investment right now?
The Charles Schwab Corporation's Altman Z-Score of 0.38 places it in the distress zone. Our DCF model estimates intrinsic value at $179.59, suggesting the stock may be undervalued by 48%. Moat rating: 2.3/5 stars.
Could The Charles Schwab Corporation go bankrupt? Altman Z-Score analysis
Z-Score of 0.38 falls below the 1.8 distress threshold, indicating significant financial stress.
- Below 1.8 — Distress Zone (high bankruptcy risk)
- 1.8 to 3.0 — Gray Zone (elevated uncertainty)
- Above 3.0 — Safe Zone (financially healthy)
What drives SCHW's Z-Score?
| Component | Formula | Value | Weight | Contribution |
|---|---|---|---|---|
| A · Working Capital / Total Assets | WC / TA | 0.0 | 1.2 | 0.0 |
| B · Retained Earnings / Total Assets | RE / TA | 0.0783 | 1.4 | 0.11 |
| C · EBIT / Total Assets | EBIT / TA | 0 | 3.3 | 0.0 |
| D · Market Cap / Total Liabilities | MCap / TL | 0.3783 | 0.6 | 0.23 |
| E · Revenue / Total Assets | Rev / TA | 0.0393 | 1.0 | 0.04 |
How has SCHW's financial health changed over time?
| Year | Z-Score | Zone |
|---|---|---|
| 2016 | 0.69 | Distress |
| 2017 | 0.58 | Distress |
| 2018 | 0.55 | Distress |
| 2019 | 0.47 | Distress |
| 2020 | 0.49 | Distress |
| 2021 | 0.34 | Distress |
| 2022 | 0.32 | Distress |
| 2023 | 0.3 | Distress |
| 2024 | 0.35 | Distress |
| 2025 | 0.38 | Distress |
Source: Calculated from SCHW's latest 10-K filing on SEC EDGAR.
What is The Charles Schwab Corporation actually worth?
Fair value range: $143.51 — $248.98
Valuation Methods
| Method | Fair Value | Weight | Detail |
|---|---|---|---|
| Historical PE × Forward EPS | $152.38 | 50% | 21.8x avg PE (4 years) × $6.99 forward EPS |
| DCF (Discounted Cash Flow) | $248.98 | 30% | Two-stage DCF: $7.1B TTM FCF, 20.0% growth, 8.4% WACC |
| EV/FCF Multiple | $143.51 | 20% | TTM FCF × 28x multiple + net cash |
Assumptions & Data Sources
| Parameter | Value | Source |
|---|---|---|
| FCF Growth Rate (Stage 1) | 20.0% | 70% analyst consensus + 30% historical |
| Analyst EPS Growth (This Year) | 23.5% | Consensus (20 analysts) |
| Analyst EPS Growth (Next Year) | 16.2% | Consensus |
| Historical 5Y FCF CAGR | 21.7% | SEC EDGAR |
| Terminal Growth Rate | 2.5% | Long-term GDP proxy |
| Discount Rate (WACC) | 8.4% | CAPM (Rf=4.3% + 0.9*5.5%) |
| Net Cash / (Debt) | $51,800M | Balance sheet |
| Base FCF (TTM) | $7.1B | Historical avg |
| Shares Outstanding | 1,738,099,441 | Latest |
Sensitivity Analysis
| Growth Rate | 8% WACC | 10% WACC | 8.4% WACC | 13% WACC |
|---|---|---|---|---|
| 0% | $65.37 | $48.31 | $61.04 | $34.86 |
| 2.5% | $75.68 | $55.50 | $70.55 | $39.64 |
| 5.0% | $87.51 | $63.72 | $81.46 | $45.08 |
| 7.5% | $103.65 | $74.74 | $96.28 | $52.21 |
Free Cash Flow History
| Year | FCF | Growth |
|---|---|---|
| 2018 | $3.3B | — |
| 2019 | $−1.2B | N/A |
| 2020 | $11.9B | N/A |
| 2021 | $8.6B | +-27.5% |
| 2022 | $6.2B | +-27.8% |
| 2023 | $1.2B | +-80.7% |
| 2024 | $1.1B | +-9.7% |
| 2025 | $18.9B | +1639.1% |
Source: FCF data from SEC EDGAR filings. Price via Yahoo Finance.
Does The Charles Schwab Corporation have a durable competitive advantage?
Moat rating: 2.3/5.
What makes up SCHW's moat score?
ROIC Stability
ROIC variability over the past decade. Score: 2/5.
Gross Margin Trend
Gross margin trajectory over the past decade. Score: 3/5.
Switching Costs
Estimated customer lock-in based on margin level. Score: 2/5.
How stable is SCHW's return on invested capital?
No ROIC history available.
| Year | ROIC | Trend |
|---|
Source: ROIC calculated from SEC EDGAR filings.
Is The Charles Schwab Corporation's dividend safe?
Can The Charles Schwab Corporation afford its dividend?
Payout ratio is 22.5%. FCF covers the dividend 9.7x. 38 consecutive years of payments.
The Charles Schwab Corporation's key financial metrics
| Metric | Latest | 1Y Ago | 3Y Ago | Trend |
|---|---|---|---|---|
| Revenue | $18.8B | $20.8B | $11.7B | Rising |
| Net Income | $5.1B | $7.2B | $3.3B | Rising |
| Free Cash Flow | $18.9B | $1.1B | $6.2B | Rising |
Common questions about The Charles Schwab Corporation
Is The Charles Schwab Corporation at risk of going bankrupt?
The Charles Schwab Corporation's Altman Z-Score of 0.38 places it in the distress zone. This metric uses balance sheet ratios to predict bankruptcy probability within 2 years. A score below 1.8 signals distress, while above 3.0 indicates safety.
What is The Charles Schwab Corporation's intrinsic value based on DCF?
Our DCF model estimates The Charles Schwab Corporation's intrinsic value at $179.59 per share. The current margin of safety is 48.1%. This estimate is based on historical free cash flow trends and a risk-adjusted discount rate.
Does The Charles Schwab Corporation have a competitive moat?
The Charles Schwab Corporation receives a moat rating of 2.3 out of 5 stars, based on ROIC stability, gross margin trends, and estimated switching costs. A rating above 3.5 suggests a durable competitive advantage.
Is The Charles Schwab Corporation's dividend safe?
Our dividend safety analysis examines payout ratio, free cash flow coverage, and the company's streak of consecutive dividend payments to determine whether the current payout is sustainable.
Before you invest in The Charles Schwab Corporation, make sure you truly understand it.
A deep understanding of a company's fundamentals, risk profile, and competitive position dramatically increases your investment accuracy and odds of success.
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FairValueLabs Disclaimer
All valuations, scores, ratings, and classifications on this page are produced by the FairValueLabs internal valuation system. They do not represent actual market value, guaranteed outcomes, or professional investment advice. These are analytical estimates for educational and research purposes only.
This is not financial advice. All data is sourced from SEC EDGAR public filings. Always consult a qualified financial advisor before making investment decisions.
Last updated: Apr 20, 2026. Data sources: SEC EDGAR (financial statements), Yahoo Finance (market data, analyst consensus). Data may not reflect the most recent quarter.
SCHW analysis methodology: How we calculate fair value, Z-Scores, and moat ratings