Earnings results often indicate what direction a company will take in the months ahead. With Q3 behind us, let’s have a look at Charles Schwab (NYSE: SCHW) and its peers.

Investment banks and brokerages facilitate capital raises, mergers and acquisitions, and securities trading. The sector benefits from corporate activity during economic expansion, increased retail trading participation, and advisory opportunities in emerging sectors. Headwinds include economic cycle vulnerability affecting deal flow, compressed trading commissions due to electronic platforms, and regulatory capital requirements constraining certain higher-risk activities.

The 16 investment banking & brokerage stocks we track reported a very strong Q3. As a group, revenues beat analysts’ consensus estimates by 4.1% while next quarter’s revenue guidance was in line.

While some investment banking & brokerage stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 2% since the latest earnings results.

Charles Schwab (NYSE: SCHW)

Founded in 1971 as a disruptive force challenging Wall Street's high fees and limited access, Charles Schwab (NYSE: SCHW) is a wealth management and brokerage firm that provides investment services, banking, and financial advice to individual investors and independent advisors.

Charles Schwab reported revenues of $6.14 billion, up 26.6% year on year. This print exceeded analysts’ expectations by 2.2%. Overall, it was a strong quarter for the company with an impressive beat of analysts’ EBITDA estimates and a decent beat of analysts’ revenue estimates.

“Our unwavering focus on delivering for clients helped us attract $137.5 billion in 3Q core net new assets plus over 1 million new brokerage accounts for the fourth straight quarter.”

Unsurprisingly, the stock is down 2.3% since reporting and currently trades at $92.18.

Is now the time to buy Charles Schwab? Access our full analysis of the earnings results here, it’s free for active Edge members.

Best Q3: Morgan Stanley (NYSE: MS)

Founded in 1924 during the post-WWI economic boom by former JP Morgan partners, Morgan Stanley (NYSE: MS) is a global financial services firm that provides investment banking, wealth management, and investment management services to corporations, governments, institutions, and individuals.

Morgan Stanley reported revenues of $18.22 billion, up 18.5% year on year, outperforming analysts’ expectations by 9.2%. The business had an incredible quarter with a beat of analysts’ EPS estimates and an impressive beat of analysts’ revenue estimates.

The market seems happy with the results as the stock is up 7.9% since reporting. It currently trades at $169.38.

Is now the time to buy Morgan Stanley? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: Perella Weinberg (NASDAQ: PWP)

Founded in 2006 by veteran investment bankers Joseph Perella and Peter Weinberg during a wave of boutique advisory firm launches, Perella Weinberg Partners (NASDAQ: PWP) is a global independent advisory firm that provides strategic and financial advice to corporations, financial sponsors, and government institutions.

Perella Weinberg reported revenues of $164.6 million, down 40.8% year on year, falling short of analysts’ expectations by 8.4%. It was a disappointing quarter as it posted a significant miss of analysts’ revenue and EPS estimates.

Perella Weinberg delivered the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 6.5% since the results and currently trades at $17.62.

Read our full analysis of Perella Weinberg’s results here.

Moelis (NYSE: MC)

Founded in 2007 by veteran banker Ken Moelis during the lead-up to the financial crisis, Moelis & Company (NYSE: MC) is an independent investment bank that provides strategic and financial advisory services to corporations, financial sponsors, governments, and sovereign wealth funds.

Moelis reported revenues of $376 million, up 33.9% year on year. This print lagged analysts' expectations by 3.2%. Taking a step back, it was a mixed quarter as it also recorded a beat of analysts’ EPS estimates but a significant miss of analysts’ EBITDA estimates.

The stock is down 4.9% since reporting and currently trades at $63.54.

Read our full, actionable report on Moelis here, it’s free for active Edge members.

Lazard (NYSE: LAZ)

Tracing its roots back to 1848 when it began as a dry goods merchant in New Orleans, Lazard (NYSE: LAZ) is a global financial advisory and asset management firm that provides strategic advice to corporations, governments, institutions, and wealthy individuals.

Lazard reported revenues of $724.7 million, up 12.2% year on year. This result beat analysts’ expectations by 1.5%. Overall, it was a very strong quarter as it also recorded a beat of analysts’ EPS estimates and a solid beat of analysts’ AUM estimates.

The stock is up 2.7% since reporting and currently trades at $51.09.

Read our full, actionable report on Lazard here, it’s free for active Edge members.

Market Update

Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.

Want to invest in winners with rock-solid fundamentals? Check out our Hidden Gem Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.