Interactive Brokers ( IBKR Quick Quote IBKR - Free Report) stock seems to be a good investment option right now. Despite concerns related to costs and lower interest rates, the company remains well-positioned for growth, backed by its technological excellence and global expansion strategy. These are expected to support top-line growth. Moreover, analysts are bullish on IBKR’s earnings growth prospects. Over the past 60 days, the Zacks Consensus Estimate for its current-year earnings has moved 2.7% upward. Thus, the company currently carries a Zacks Rank #2 (Buy). Looking at its price performance, shares of IBKR have gained 35.5% over the past year compared with 39.7% growth recorded by the industry.
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Mentioned below are a few other factors that make IBKR stock a promising pick:
Earnings Growth: Interactive Brokers has witnessed earnings growth of 22.1% in the past three to five years, higher than the industry average of 18.6%. The uptrend is likely to continue in the near term. In 2021 and 2022, the company’s earnings are projected to grow 35.7% and 1.5%, respectively. Moreover, its long-term (three-five years) projected earnings growth rate of 23.4% promises rewards for investors. Revenue Strength: Driven by an increase in interest income, commissions and the company’s business restructuring efforts, its net revenues witnessed a compound annual growth rate (CAGR) of 13.3% over the last six years (2015-2020). The uptrend continued in the first nine months of 2021. Given the steady improvement in Daily Average Revenue Trades (DARTs), IBKR is expected to continue to witness a rise in the top line. For 2021, revenues are projected to grow 19%. Strong Leverage: Interactive Brokers does not use debt to finance its operations. It has a debt/equity ratio of nil compared with the industry average of 0.25. This highlights that IBKR is better positioned than its peers. The company will be financially stable even in adverse economic conditions. Technological Advancement: IBKR 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 very low level of compensation expenses, relative to net revenues, primarily driven by its technological excellence. Moreover, the launch of IBKR Lite has enabled investors to trade commission-free and is, thus, expected to result in a rise in the company’s market share. The launch of Impact Dashboard (an innovative sustainable investing tool) has made IBKR the first major brokerage firm to allow investors to easily align their portfolio with their values. The company has also launched cryptocurrency trading via Paxos Trust Company, charging lower commissions than other crypto exchanges. Global Expansion Strategy: Interactive Brokers explores opportunities in the emerging markets of Taiwan, Mexico and India. The diversification helps it experience revenue stability. With the Central Clearing Houses as its counterparties, sole trading with exchange-listed instruments and continuous monitoring of customer positions, IBKR has been able to restrict its credit risk to a great extent. Other Stocks Worth Considering
A few other top-ranked stocks from the same space are
Morgan Stanley ( MS Quick Quote MS - Free Report) , Cowen Group, Inc. ( COWN Quick Quote COWN - Free Report) and Moelis & Company ( MC Quick Quote MC - Free Report) . Morgan Stanley, Cowen Group and Moelis & Company currently carry a Zacks Rank of 2. You can see . the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here The Zacks Consensus Estimate for Morgan Stanley’s current-year earnings has been unchanged over the past 60 days. MS’s shares have risen 47.3% in the past year. Earnings estimates for COWN have moved 5.6% upward for 2021 over the past 60 days. Over the past year, Cowen Group’s shares have rallied 41.4%. Moelis & Company recorded a marginal upward earnings estimate revision for 2021 over the past 60 days. The stock has rallied 35.7% in the past year.