What happened

Shares of Charles Schwab (SCHW 2.13%) rocketed 10% higher when trading opened after earnings came out this morning, and they have inched higher over the course of the day, hitting 12.4% as of 2:15 p.m. ET on Tuesday.

Analysts had forecast that Schwab would earn $0.71 per share on revenue of $4.61 billion for the second quarter, but this morning the online broker reported adjusted earnings of $0.75 per share, and revenue of $4.66 billion.  

So what

And yet, while Schwab beat expectations on the top and bottom lines, it wasn't an unalloyed victory. Revenue wasn't as bad as feared, but it was still down 9% from the $5.1 billion reported in last year's second quarter. And the actual profit of only $0.64 per share under generally accepted accounting principles (GAAP) was significantly weaker than the adjusted (non-GAAP) earnings of $0.75.

What's more, both non-GAAP and GAAP earnings declined significantly year over year, down 23% and 26%, respectively.

But management emphasized the new accounts and new assets its customers entrusted to it. One million new brokerage customers signed up with Schwab in the second quarter, and customers added $52 billion in new assets to their accounts.

Now what

That sounds like good news for the broker's popularity in the long run. In the nearer term, however, you should pay attention to some of management's comments on investor unease. Investor sentiment was softer at the start of the quarter, for example, and economic conditions remain unsettled, according to CEO Walt Bettinger.

Furthermore, Schwab saw net interest revenue from its accounts decline 10% year over year, and the company's net interest margin contracted by 32 basis points to 1.87% quarter over quarter.

The stock still looks reasonably priced at 15.5 times trailing earnings today. Assuming the company hits analyst targets of 11.8% in long-term earnings growth, and maintains its current 1.7% dividend yield, I see Schwab shares as priced slightly above inherent value -- but not yet unreasonably expensive.