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LPL Financial (LPLA) Q3 Earnings Beat on Higher Revenues
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LPL Financial’s (LPLA - Free Report) third-quarter 2023 adjusted earnings of $3.74 per share handily surpassed the Zacks Consensus Estimate of $3.59 per share. The bottom line reflects a rise of 19% from the prior-year quarter.
Results benefited from robust improvement in revenues, partly offset by an increase in expenses. LPLA recorded growth in brokerage and advisory assets, which acted as a tailwind.
After considering certain non-recurring charges, net income was $224.3 million or $2.91 per share, compared with $232.3 million or $2.86 per share, in the prior-year quarter. Our estimate for net income was $282.3 million.
Revenues Improve, Expenses Rise
Total net revenues of $2.52 billion grew 17% year over year. The top line met the Zacks Consensus Estimate.
Total expenses increased 19% year over year to $2.20 billion. The rise was due to an increase in all cost components. Our estimate for total expenses was $2.13 billion.
As of Sep 30, 2023, LPL Financial’s total brokerage and advisory assets were $1,238.4 billion, up 19% year over year. Our estimate was $1,261.7 billion.
In the reported quarter, total net new assets were $33.2 billion, up from $19.9 billion in the prior-year quarter. Our estimate for the metric was $24.2 billion. Total client cash balances declined 29% year over year to $47.3 billion.
Balance Sheet Position Solid
As of Sep 30, 2023, total assets were $9.5 billion, up 1% on a sequential basis. As of the same date, cash and cash equivalents totaled $799.2 million, up 5% sequentially.
Total stockholders’ equity was $2.1 billion as of Sep 30, 2023, down 1% sequentially.
Share Repurchase Update
In the reported quarter, the company repurchased shares worth $250 million.
Our View
LPL Financial’s recruiting efforts and solid advisor productivity will likely continue aiding advisory revenues. Strategic buyouts will keep supporting financials. However, mounting expenses and a deteriorating operating backdrop remain major near-term concerns for the company.
LPL Financial Holdings Inc. Price, Consensus and EPS Surprise
Charles Schwab’s (SCHW - Free Report) third-quarter 2023 adjusted earnings of 77 cents per share beat the Zacks Consensus Estimate of 75 cents. The bottom line, however, declined 30% from the prior-year quarter.
SCHW’s results benefited from the solid performance of the asset management business. The absence of fee waivers and solid brokerage account numbers acted as tailwinds during the quarter. However, lower revenues due to higher funding costs and lower volatility posed a major headwind. SCHW also recorded a rise in expenses.
Interactive Brokers Group’s (IBKR - Free Report) third-quarter 2023 adjusted earnings per share of $1.55 beat the Zacks Consensus Estimate of $1.48. Also, the bottom line reflects a rise of 43.5% from the prior-year quarter.
IBKR’s results benefited from a solid improvement in revenues. Further, the company recorded an increase in customer accounts during the quarter. Also, it had a strong capital position. However, an increase in expenses and a slight decline in daily average revenue trades were the major headwinds for SCHW.
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LPL Financial (LPLA) Q3 Earnings Beat on Higher Revenues
LPL Financial’s (LPLA - Free Report) third-quarter 2023 adjusted earnings of $3.74 per share handily surpassed the Zacks Consensus Estimate of $3.59 per share. The bottom line reflects a rise of 19% from the prior-year quarter.
Results benefited from robust improvement in revenues, partly offset by an increase in expenses. LPLA recorded growth in brokerage and advisory assets, which acted as a tailwind.
After considering certain non-recurring charges, net income was $224.3 million or $2.91 per share, compared with $232.3 million or $2.86 per share, in the prior-year quarter. Our estimate for net income was $282.3 million.
Revenues Improve, Expenses Rise
Total net revenues of $2.52 billion grew 17% year over year. The top line met the Zacks Consensus Estimate.
Total expenses increased 19% year over year to $2.20 billion. The rise was due to an increase in all cost components. Our estimate for total expenses was $2.13 billion.
As of Sep 30, 2023, LPL Financial’s total brokerage and advisory assets were $1,238.4 billion, up 19% year over year. Our estimate was $1,261.7 billion.
In the reported quarter, total net new assets were $33.2 billion, up from $19.9 billion in the prior-year quarter. Our estimate for the metric was $24.2 billion. Total client cash balances declined 29% year over year to $47.3 billion.
Balance Sheet Position Solid
As of Sep 30, 2023, total assets were $9.5 billion, up 1% on a sequential basis. As of the same date, cash and cash equivalents totaled $799.2 million, up 5% sequentially.
Total stockholders’ equity was $2.1 billion as of Sep 30, 2023, down 1% sequentially.
Share Repurchase Update
In the reported quarter, the company repurchased shares worth $250 million.
Our View
LPL Financial’s recruiting efforts and solid advisor productivity will likely continue aiding advisory revenues. Strategic buyouts will keep supporting financials. However, mounting expenses and a deteriorating operating backdrop remain major near-term concerns for the company.
LPL Financial Holdings Inc. Price, Consensus and EPS Surprise
LPL Financial Holdings Inc. price-consensus-eps-surprise-chart | LPL Financial Holdings Inc. Quote
Currently, LPL Financial carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Brokerage Firms
Charles Schwab’s (SCHW - Free Report) third-quarter 2023 adjusted earnings of 77 cents per share beat the Zacks Consensus Estimate of 75 cents. The bottom line, however, declined 30% from the prior-year quarter.
SCHW’s results benefited from the solid performance of the asset management business. The absence of fee waivers and solid brokerage account numbers acted as tailwinds during the quarter. However, lower revenues due to higher funding costs and lower volatility posed a major headwind. SCHW also recorded a rise in expenses.
Interactive Brokers Group’s (IBKR - Free Report) third-quarter 2023 adjusted earnings per share of $1.55 beat the Zacks Consensus Estimate of $1.48. Also, the bottom line reflects a rise of 43.5% from the prior-year quarter.
IBKR’s results benefited from a solid improvement in revenues. Further, the company recorded an increase in customer accounts during the quarter. Also, it had a strong capital position. However, an increase in expenses and a slight decline in daily average revenue trades were the major headwinds for SCHW.