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Interactive Brokers (IBKR) Q4 Earnings Lag on Lower Revenues
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Interactive Brokers Group, Inc.’s (IBKR - Free Report) fourth-quarter 2018 earnings per share of 57 cents missed the Zacks Consensus Estimate of 59 cents. The figure compares favorably with the prior-year quarter’s adjusted earnings of 43 cents.
Results were adversely impacted by decline in revenues and higher expenses. However, the Electronic Brokerage segment continued to perform decently and acted as a tailwind. Also, the company witnessed an increase in daily average revenue trades (DARTs).
Interactive Brokers reported comprehensive income available to common shareholders of $43 million or 56 cents per share against comprehensive loss of $2 million or 2 cents per share in the prior-year quarter.
For2018, earnings of $2.28 per share beat the Zacks Consensus Estimate of $2.11. Also, it was above 2017 adjusted earnings of $1.53. The company reported comprehensive income available to common shareholders of $156 million or $2.09 per share, up from $87 million or $1.22 per share reported in 2017.
Revenues Decline, Expenses Rise
Total net revenues for the reported quarter decreased 4.5% year over year to $492 million. The fall was primarily due to lower trading gains, decline in other income and higher interest expenses. Also, the figure lagged the Zacks Consensus Estimate of $497 million.
Total net revenues for 2018 were $1.90 billion, up 11.8%. However, the figure lagged the Zacks Consensus Estimate of $1.92 billion.
Total non-interest expenses jumped 21.2% from the year-ago quarter to $183 million. The rise in all components except communications costs were the reasons for the increase.
Income before income taxes was $309 million in the quarter, down 15.1% from the prior-year quarter. Pre-tax profit margin was 63%, down from 71%.
Quarterly Segment Performance
Electronic Brokerage: Net revenues increased 25.6% year over year to $490 million. Pre-tax income rose 23.4% to $311 million. Total DARTs for cleared and execution-only customers were 951,000, up 30% from the year-ago quarter. Pre-tax profit margin declined to 63% from 65%.
Market Making: Net revenues were $17 million, down 32% from the prior-year quarter. Pre-tax income was $9 million, up 12.5% year over year. Pre-tax profit margin was 53% compared with 32% in the year-ago quarter.
The Corporate segment reported negative revenues of $15 million against revenues of $100 million in the year-ago quarter. Pre-tax loss was $11 million against pre-tax income of $104 million a year ago.
Strong Capital Position
As of Sep 30, 2018, cash and cash equivalents (including cash and securities set aside for regulatory purposes) totaled $25.7 billion compared with $22 billion as of Dec 31, 2017. As of Dec 31, 2018, total assets amounted to $60.5 billion compared with $61.2 billion as of Dec 31, 2017. Total equity was $7.2 billion compared with $6.4 billion at the end of December 2017.
Our Take
Interactive Brokers is poised to capitalize on growth scopes, backed by its market-leading position, technological advancement and optimization of resource allocation across global electronic networks. However, its high dependence on IBG LLC is a major concern. This is because, if IBG LLC fails to provide sufficient funds to pay taxes or for any other purpose, the company’s financial condition may suffer.
Interactive Brokers Group, Inc. Price, Consensus and EPS Surprise
Performance and Upcoming Releases of Other Investment Brokers
Charles Schwab’s (SCHW - Free Report) fourth-quarter earnings of 65 cents per share beat the Zacks Consensus Estimate of 64 cents. Also, earnings surged 59% from the prior-year quarter.
We now look forward to E*TRADE Financial Corporation and LPL Financial Holdings Inc. (LPLA - Free Report) , which are slated to report results on Jan 24 and Jan 31, respectively.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?
From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
Image: Bigstock
Interactive Brokers (IBKR) Q4 Earnings Lag on Lower Revenues
Interactive Brokers Group, Inc.’s (IBKR - Free Report) fourth-quarter 2018 earnings per share of 57 cents missed the Zacks Consensus Estimate of 59 cents. The figure compares favorably with the prior-year quarter’s adjusted earnings of 43 cents.
Results were adversely impacted by decline in revenues and higher expenses. However, the Electronic Brokerage segment continued to perform decently and acted as a tailwind. Also, the company witnessed an increase in daily average revenue trades (DARTs).
Interactive Brokers reported comprehensive income available to common shareholders of $43 million or 56 cents per share against comprehensive loss of $2 million or 2 cents per share in the prior-year quarter.
For2018, earnings of $2.28 per share beat the Zacks Consensus Estimate of $2.11. Also, it was above 2017 adjusted earnings of $1.53. The company reported comprehensive income available to common shareholders of $156 million or $2.09 per share, up from $87 million or $1.22 per share reported in 2017.
Revenues Decline, Expenses Rise
Total net revenues for the reported quarter decreased 4.5% year over year to $492 million. The fall was primarily due to lower trading gains, decline in other income and higher interest expenses. Also, the figure lagged the Zacks Consensus Estimate of $497 million.
Total net revenues for 2018 were $1.90 billion, up 11.8%. However, the figure lagged the Zacks Consensus Estimate of $1.92 billion.
Total non-interest expenses jumped 21.2% from the year-ago quarter to $183 million. The rise in all components except communications costs were the reasons for the increase.
Income before income taxes was $309 million in the quarter, down 15.1% from the prior-year quarter. Pre-tax profit margin was 63%, down from 71%.
Quarterly Segment Performance
Electronic Brokerage: Net revenues increased 25.6% year over year to $490 million. Pre-tax income rose 23.4% to $311 million. Total DARTs for cleared and execution-only customers were 951,000, up 30% from the year-ago quarter. Pre-tax profit margin declined to 63% from 65%.
Market Making: Net revenues were $17 million, down 32% from the prior-year quarter. Pre-tax income was $9 million, up 12.5% year over year. Pre-tax profit margin was 53% compared with 32% in the year-ago quarter.
The Corporate segment reported negative revenues of $15 million against revenues of $100 million in the year-ago quarter. Pre-tax loss was $11 million against pre-tax income of $104 million a year ago.
Strong Capital Position
As of Sep 30, 2018, cash and cash equivalents (including cash and securities set aside for regulatory purposes) totaled $25.7 billion compared with $22 billion as of Dec 31, 2017. As of Dec 31, 2018, total assets amounted to $60.5 billion compared with $61.2 billion as of Dec 31, 2017. Total equity was $7.2 billion compared with $6.4 billion at the end of December 2017.
Our Take
Interactive Brokers is poised to capitalize on growth scopes, backed by its market-leading position, technological advancement and optimization of resource allocation across global electronic networks. However, its high dependence on IBG LLC is a major concern. This is because, if IBG LLC fails to provide sufficient funds to pay taxes or for any other purpose, the company’s financial condition may suffer.
Interactive Brokers Group, Inc. Price, Consensus and EPS Surprise
Interactive Brokers Group, Inc. Price, Consensus and EPS Surprise | Interactive Brokers Group, Inc. Quote
Currently, Interactive Brokers carries a Zacks Rank #3 (Hold).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance and Upcoming Releases of Other Investment Brokers
Charles Schwab’s (SCHW - Free Report) fourth-quarter earnings of 65 cents per share beat the Zacks Consensus Estimate of 64 cents. Also, earnings surged 59% from the prior-year quarter.
We now look forward to E*TRADE Financial Corporation and LPL Financial Holdings Inc. (LPLA - Free Report) , which are slated to report results on Jan 24 and Jan 31, respectively.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?
From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
See Stocks Today >>