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LPL Financial (LPLA) Q1 Earnings Beat, Revenues Increase Y/Y

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LPL Financial’s (LPLA - Free Report) first-quarter 2021 adjusted earnings of $1.77 per share easily surpassed the Zacks Consensus Estimate of $1.58. However, the bottom line reflects a decline of 14% from the prior-year quarter.

Results in the quarter benefited from an improvement in revenues, partly offset by higher expenses. Further, the company’s balance sheet position remained strong.

After taking into consideration the amortization of intangible assets and acquisition costs related to Waddell & Reed’s wealth management business, net income was $129.6 million or $1.59 per share, down from $155.6 million or $1.92 per share in the year-ago quarter.

Revenues Improve, Expenses Rise

Total net revenues were $1.71 billion, up 17% year over year. An increase in all components of revenues except for asset-based revenues and net interest income drove the rise.

Total operating expenses increased 22% to $1.49 billion. All expense components increased, except for promotional expenses and other costs.

At the end of the reported quarter, LPL Financial’s total brokerage and advisory assets were $958.3 billion, jumping 43% year over year.

Total net new assets were $28.9 billion at the end of the quarter, up from $14.3 billion of new assets recorded at the end of the prior-year quarter. Total client cash balances grew 1% to $48.3 billion.

Balance Sheet Position Strong

As of Mar 31, 2021, the company had total assets of $6.62 billion, up 1% from the Dec 31, 2020-level. As of the same date, cash and cash equivalents totaled $839.1 million, up 4% sequentially.

Total stockholders’ equity was $1.43 billion as of Mar 31, 2021, up from $1.31 billion recorded at the end of the prior quarter.

Our View

LPL Financial’s recruiting efforts and solid advisor productivity are likely to continue aiding advisory revenues. Notably, the deal to acquire the wealth management business of Waddell & Reed Financial is expected to be accretive to run-rate earnings “prior to intangibles following asset transfer.” However, persistently mounting expenses are expected to hurt the company’s bottom line to an extent in the near term.

LPL Financial Holdings Inc. Price, Consensus and EPS Surprise

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 2021 adjusted earnings of 84 cents per share beat the Zacks Consensus Estimate of 82 cents. Also, the bottom line grew 38% from the prior-year quarter.

Interactive Brokers Group’s (IBKR - Free Report) first-quarter 2021 adjusted earnings per share of 98 cents outpaced the Zacks Consensus Estimate of 90 cents. Also, the bottom line reflects growth of 42% on a year-over-year basis.

Raymond James’ (RJF - Free Report) second-quarter fiscal 2021 (ended Mar 31) adjusted earnings of $2.51 per share comfortably surpassed the Zacks Consensus Estimate of $2.09. Also, the bottom line was up significantly from the prior-year quarter’s $1.20.

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