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LPL Financial's (LPLA) Q1 Earnings Beat on Higher Revenues
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LPL Financial’s (LPLA - Free Report) first-quarter 2024 adjusted earnings of $4.21 per share handily outpaced the Zacks Consensus Estimate of $3.77. The bottom line, however, reflects a decline of 6% year over year.
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 items, net income was $268.8 million or $3.83 per share, down from $338.9 million or $4.24 per share in the prior-year quarter. Our estimate for net income was $240.7 million.
Revenues Improve, Expenses Rise
Total net revenues of $2.83 billion grew 17% year over year. The top line beat the Zacks Consensus Estimate of $2.68 billion.
Total expenses jumped 25% to $2.46 billion. The rise was due to an increase in all cost components except professional services costs. Our estimate for total expenses was $2.31 billion.
As of Mar 31, 2024, LPL Financial’s total brokerage and advisory assets were $1,440.9 billion, up 23% year over year.
In the reported quarter, total net new assets were $16.7 billion, down from $24.5 billion in the prior-year quarter.
Total client cash balances declined 14% year over year to $46.3 billion.
Balance Sheet Position Solid
As of Mar 31, 2024, total assets were $11.02 billion, up 7% on a sequential basis. As of the same date, cash and cash equivalents totaled $1.1 billion, up from $465.7 million in the prior-quarter end.
Total stockholders’ equity was $2.27 billion as of Mar 31, 2024, up 9% sequentially.
Share Repurchase Update
In the reported quarter, the company repurchased shares worth $70 million.
Our View
LPL Financial’s recruiting efforts and solid advisor productivity will likely continue aiding advisory revenues. Strategic acquisitions will keep supporting financials. In April, it completed the acquisition of Crown Capital Securities, L.P.
However, mounting expenses and a tough 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) first-quarter 2024 adjusted earnings of 74 cents per share beat the Zacks Consensus Estimate by a penny. The bottom line, however, declined 20% from the prior-year quarter.
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 posed a major headwind. SCHW also recorded a rise in adjusted expenses.
Interactive Brokers Group’s (IBKR - Free Report) first-quarter 2024 adjusted earnings per share of $1.64 beat the Zacks Consensus Estimate by a penny. Also, the bottom line reflects a rise of 21.5% from the prior-year quarter.
Results were primarily aided by an increase in revenues. IBKR recorded growth in customer accounts during the quarter, which, along with a rise in daily average revenue trades, was another tailwind. However, higher expenses hurt the results to some extent.
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LPL Financial's (LPLA) Q1 Earnings Beat on Higher Revenues
LPL Financial’s (LPLA - Free Report) first-quarter 2024 adjusted earnings of $4.21 per share handily outpaced the Zacks Consensus Estimate of $3.77. The bottom line, however, reflects a decline of 6% year over year.
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 items, net income was $268.8 million or $3.83 per share, down from $338.9 million or $4.24 per share in the prior-year quarter. Our estimate for net income was $240.7 million.
Revenues Improve, Expenses Rise
Total net revenues of $2.83 billion grew 17% year over year. The top line beat the Zacks Consensus Estimate of $2.68 billion.
Total expenses jumped 25% to $2.46 billion. The rise was due to an increase in all cost components except professional services costs. Our estimate for total expenses was $2.31 billion.
As of Mar 31, 2024, LPL Financial’s total brokerage and advisory assets were $1,440.9 billion, up 23% year over year.
In the reported quarter, total net new assets were $16.7 billion, down from $24.5 billion in the prior-year quarter.
Total client cash balances declined 14% year over year to $46.3 billion.
Balance Sheet Position Solid
As of Mar 31, 2024, total assets were $11.02 billion, up 7% on a sequential basis. As of the same date, cash and cash equivalents totaled $1.1 billion, up from $465.7 million in the prior-quarter end.
Total stockholders’ equity was $2.27 billion as of Mar 31, 2024, up 9% sequentially.
Share Repurchase Update
In the reported quarter, the company repurchased shares worth $70 million.
Our View
LPL Financial’s recruiting efforts and solid advisor productivity will likely continue aiding advisory revenues. Strategic acquisitions will keep supporting financials. In April, it completed the acquisition of Crown Capital Securities, L.P.
However, mounting expenses and a tough 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) first-quarter 2024 adjusted earnings of 74 cents per share beat the Zacks Consensus Estimate by a penny. The bottom line, however, declined 20% from the prior-year quarter.
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 posed a major headwind. SCHW also recorded a rise in adjusted expenses.
Interactive Brokers Group’s (IBKR - Free Report) first-quarter 2024 adjusted earnings per share of $1.64 beat the Zacks Consensus Estimate by a penny. Also, the bottom line reflects a rise of 21.5% from the prior-year quarter.
Results were primarily aided by an increase in revenues. IBKR recorded growth in customer accounts during the quarter, which, along with a rise in daily average revenue trades, was another tailwind. However, higher expenses hurt the results to some extent.