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Analyst Blog

Shares of Interactive Brokers Group, Inc. (IBKR - Analyst Report) crafted a new 52-week high, touching $21.69 in the second half of the trading session on Nov 5. The closing price of this automated electronic market maker and broker represents a solid year-to-date return of 58.2%. The trading volume for the session was 346,647 shares.

Despite hitting its 52-week high, this Zacks Rank #2 (Buy) stock has plenty of upside left, given its strong estimate revisions over the last 30 days and expected long-term earnings growth of 10.3%.

Growth Drivers

Impressive third-quarter 2013 results – including a year over year growth in earnings of 23.1% on better top line and lower operating expenses – as well as a strong cash balance  were the primary growth drivers for Interactive Brokers.

On Oct 15, Interactive Brokers reported its third-quarter 2013 earnings of 32 cents per share, in line with the Zacks Consensus Estimate. Moreover, this compared favorably with the year-ago figure of 26 cents.

A year-over-year increase of 2.4% in net revenue, 11% decline in non-interest expense and growth in assets were the tailwinds for the quarter.  Moreover, Electronic Brokerage segment witnessed continued improvement. Market Making segment also showed marginal improvement based on cost containment.
Further, Electronic Brokerage segment witnessed a rise in brokerage metrics for Oct 2013. Total customer Daily Average Revenue Trades (DARTs) improved 32% from Oct 2012, and 7% from Sep 2013 to 510,000.

Estimate Revisions Show Potency

Over the last 30 days, 3 out of 4 estimates for 2013 have been revised upward for Interactive Brokers, lifting the Zacks Consensus Estimate by 6.6% to 81 cents per share.

Other investment brokers worth considering include E*TRADE Financial Corp. (ETFC - Analyst Report) , The Charles Schwab Corp. (SCHW - Analyst Report) ) and Evercore Partners Inc. (EVR - Snapshot Report) . All these stocks carry the same Zacks Rank as Interactive Brokers.