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Electronic Brokerage Focus to Aid Interactive Brokers (IBKR)
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Interactive Brokers Group, Inc.’s (IBKR - Free Report) continued focus on the Electronic Brokerage segment, efforts to develop proprietary software and an increase in emerging market customers are expected to support its financials. Supported by a solid liquidity position, the company will likely be able to sustain dividend payments in the future, thus enhancing shareholder value.
Analysts seem to be optimistic regarding its earnings growth potential. The Zacks Consensus Estimate for Interactive Brokers’ current-year earnings has been revised 1.9% upward over the past 30 days. Thus, the company currently carries a Zacks Rank #2 (Buy).
So far this year, shares of the company have gained 13.6% compared with 35.3% growth recorded by the industry.
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Looking at its fundamentals, Interactive Brokers’ total net revenues witnessed a compound annual growth rate of 13.3% over the last six years (2015-2020), with the uptrend continuing in the first half of 2021. The rise was mainly driven by an increase in interest income, commissions and the company’s business-restructuring efforts. Supported by a steady rise in Daily Average Revenue Trades, the upward momentum is expected to continue in the quarters ahead.
The company’s position with respect to the interface of four broad historical trends is also impressive. It processes trades in stocks, futures, options and forex on more than 135 exchanges across several countries and currencies. Unlike many of its peers, it has a low level of compensation expense, relative to net revenues (11.7% at the end of the first half of 2021), primarily driven by its technological excellence.
Recently, Interactive Brokers launched cryptocurrency trading via Paxos Trust Company, charging commissions that are lower than other crypto exchanges. This will help it garner more market share. Also, the launch of IBKR Lite has enabled investors to trade commission-free. The acquisition of the retail unit of Folio Investments will strengthen the company’s position in the online brokerage space.
However, persistently increasing operating expenses (owing to technology upgrades and investments in franchise) are expected to hurt the bottom line to some extent. Further, the low interest rate environment remains concerning and might hamper the top line in the near term.
A few other top-ranked stocks from the finance space are mentioned below.
Affiliated Managers Group, Inc.’s (AMG - Free Report) current-year earnings estimates have moved up 1.1% over the past 60 days. The company’s shares have gained 48.9% so far this year. At present, it carries a Zacks Rank of 2.
Ares Management Corporation (ARES - Free Report) currently sports a Zacks Rank of 1. Its current-year earnings estimates have moved up 2.5% over the past 60 days. The company’s shares have gained 61.1% year to date.
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Electronic Brokerage Focus to Aid Interactive Brokers (IBKR)
Interactive Brokers Group, Inc.’s (IBKR - Free Report) continued focus on the Electronic Brokerage segment, efforts to develop proprietary software and an increase in emerging market customers are expected to support its financials. Supported by a solid liquidity position, the company will likely be able to sustain dividend payments in the future, thus enhancing shareholder value.
Analysts seem to be optimistic regarding its earnings growth potential. The Zacks Consensus Estimate for Interactive Brokers’ current-year earnings has been revised 1.9% upward over the past 30 days. Thus, the company currently carries a Zacks Rank #2 (Buy).
So far this year, shares of the company have gained 13.6% compared with 35.3% growth recorded by the industry.
Looking at its fundamentals, Interactive Brokers’ total net revenues witnessed a compound annual growth rate of 13.3% over the last six years (2015-2020), with the uptrend continuing in the first half of 2021. The rise was mainly driven by an increase in interest income, commissions and the company’s business-restructuring efforts. Supported by a steady rise in Daily Average Revenue Trades, the upward momentum is expected to continue in the quarters ahead.
The company’s position with respect to the interface of four broad historical trends is also impressive. It processes trades in stocks, futures, options and forex on more than 135 exchanges across several countries and currencies. Unlike many of its peers, it has a low level of compensation expense, relative to net revenues (11.7% at the end of the first half of 2021), primarily driven by its technological excellence.
Recently, Interactive Brokers launched cryptocurrency trading via Paxos Trust Company, charging commissions that are lower than other crypto exchanges. This will help it garner more market share. Also, the launch of IBKR Lite has enabled investors to trade commission-free. The acquisition of the retail unit of Folio Investments will strengthen the company’s position in the online brokerage space.
However, persistently increasing operating expenses (owing to technology upgrades and investments in franchise) are expected to hurt the bottom line to some extent. Further, the low interest rate environment remains concerning and might hamper the top line in the near term.
A few other top-ranked stocks from the finance space are mentioned below.
The Charles Schwab Corporation’s (SCHW - Free Report) current-year earnings estimates have moved marginally upward over the past 60 days. The stock has appreciated 42.8% so far this year. The company currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Affiliated Managers Group, Inc.’s (AMG - Free Report) current-year earnings estimates have moved up 1.1% over the past 60 days. The company’s shares have gained 48.9% so far this year. At present, it carries a Zacks Rank of 2.
Ares Management Corporation (ARES - Free Report) currently sports a Zacks Rank of 1. Its current-year earnings estimates have moved up 2.5% over the past 60 days. The company’s shares have gained 61.1% year to date.