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LPL Financial (LPLA) Soars to a 52-Week High, Time to Cash Out?
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Have you been paying attention to shares of LPL Financial Holdings (LPLA - Free Report) ? Shares have been on the move with the stock up 20.1% over the past month. LPLA hit a new 52-week high of $68.62 in the previous session. LPL Financial Holdings has gained 19.9% since the start of the year compared to the -1.8% move for the Finance sector and the 5.6% year-to-date return for its peer group.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, having beaten the Zacks Consensus Estimate in each of the last four quarters. In its last earnings report on May 3, 2018, LPL Financial Holdings reported EPS of $1.01 versus the Zacks Consensus Estimate of $0.69 while it beat the consensus revenue estimate by 4.5%.
For the current fiscal year, LPL Financial Holdings is expected to post earnings of $4.72 per share on $5.04 billion in revenues. This represents a 57.33% change in EPS on a 17.75% change in revenues. For the next fiscal year, the company is expected to earn $5.54 per share on $5.28 billion in revenues. This represents a year-over-year change of 17.29% and 4.75%, respectively.
Valuation Metrics
LPL Financial Holdings may be at a 52-week high right now, but what might the future hold for LPLA? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
LPL Financial Holdings has a Value Score of A. The stock's Growth and Momentum Scores are B and A, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 14.5X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 15.3X versus its peer group's average of 13X. Additionally, the stock has a PEG ratio of 0.97. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, LPL Financial Holdings currently has a Zacks Rank of #1 (Strong Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 or 2 (Buy) and Style Scores of A or B, it looks as if LPL Financial Holdings meets the list of requirements. Thus, it seems as though LPLA shares could have a bit more room to run in the near term.
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LPL Financial (LPLA) Soars to a 52-Week High, Time to Cash Out?
Have you been paying attention to shares of LPL Financial Holdings (LPLA - Free Report) ? Shares have been on the move with the stock up 20.1% over the past month. LPLA hit a new 52-week high of $68.62 in the previous session. LPL Financial Holdings has gained 19.9% since the start of the year compared to the -1.8% move for the Finance sector and the 5.6% year-to-date return for its peer group.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, having beaten the Zacks Consensus Estimate in each of the last four quarters. In its last earnings report on May 3, 2018, LPL Financial Holdings reported EPS of $1.01 versus the Zacks Consensus Estimate of $0.69 while it beat the consensus revenue estimate by 4.5%.
For the current fiscal year, LPL Financial Holdings is expected to post earnings of $4.72 per share on $5.04 billion in revenues. This represents a 57.33% change in EPS on a 17.75% change in revenues. For the next fiscal year, the company is expected to earn $5.54 per share on $5.28 billion in revenues. This represents a year-over-year change of 17.29% and 4.75%, respectively.
Valuation Metrics
LPL Financial Holdings may be at a 52-week high right now, but what might the future hold for LPLA? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
LPL Financial Holdings has a Value Score of A. The stock's Growth and Momentum Scores are B and A, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 14.5X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 15.3X versus its peer group's average of 13X. Additionally, the stock has a PEG ratio of 0.97. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
LPL Financial Holdings Inc. Price and Consensus
LPL Financial Holdings Inc. Price and Consensus | LPL Financial Holdings Inc. Quote
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, LPL Financial Holdings currently has a Zacks Rank of #1 (Strong Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 or 2 (Buy) and Style Scores of A or B, it looks as if LPL Financial Holdings meets the list of requirements. Thus, it seems as though LPLA shares could have a bit more room to run in the near term.