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LPL Financial (LPLA) Q4 Earnings Beat, Revenues & Costs Rise

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LPL Financial’s (LPLA - Free Report) fourth-quarter 2021 adjusted earnings of $1.63 per share surpassed the Zacks Consensus Estimate of $1.54. The bottom line reflects a rise of 7% from the prior-year quarter.

Results 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, net income was $108.1 million or $1.32 per share, down from $111.5 million or $1.38 per share in the year-ago quarter.

For 2021, adjusted earnings of $7.02 per share surpassed the Zacks Consensus Estimate of $6.93. The bottom line reflects a rise of 9% from the prior year. Net income (GAAP basis) was $459.9 million or $5.63 per share, down from $472.6 million or $5.86 per share in 2020.

Revenues Improve, Expenses Rise

Total quarterly net revenues were $2.09 billion, jumping 32% year over year. An increase in all components of revenues, except for other revenues, drove the rise. The top line surpassed the Zacks Consensus Estimate of $2.05 billion.

In 2021, net revenues were $7.72 billion, jumping 31% year over year. The top line beat the Zacks Consensus Estimate of $7.62 billion.

Total quarterly expenses increased 36% to $1.96 billion. All expense components increased in the quarter.

As of Dec 31, 2021, LPL Financial’s total brokerage and advisory assets were $1,206.4 billion, rising 34% year over year.

In the fourth quarter of 2021, total net new assets were $26.2 billion, up from $21.8 billion in the prior-year quarter. Total client cash balances grew 17% year over year to $57.3 billion.

Balance Sheet Position Strong

As of Dec 31, 2021, total assets were $7.99 billion, up 4% sequentially. As of the same date, cash and cash equivalents totaled $495.2 million, down 49.4% from the end of the previous quarter.

Total stockholders’ equity was $1.67 billion as of Dec 31, 2021, up from $1.62 billion recorded at the end of the prior quarter.

Our View

LPL Financial’s recruiting efforts and solid advisor productivity will likely continue aiding advisory revenues. Strategic buyouts, including the acquisition of Waddell & Reed's wealth management business, will keep supporting financials. However, persistently mounting expenses are expected to hurt the company’s bottom line.

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 #2 (Buy). 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) fourth-quarter 2021 adjusted earnings of 86 cents per share missed the Zacks Consensus Estimate of 88 cents. The bottom line, however, grew 16% from the prior-year quarter.

Schwab’s results reflect solid client assets balance and a rise in new brokerage accounts. These were driven by solid client activity, which supported SCHW’s revenues in the quarter. A slight dip in operating expenses was a tailwind. However, fee waivers and lower interest rates were drags.

Interactive Brokers Group’s (IBKR - Free Report) fourth-quarter 2021 adjusted earnings per share of 83 cents surpassed the Zacks Consensus Estimate of 82 cents. The bottom line reflects growth of 20.3% from the prior-year quarter.

IBKR recorded a marginal rise in revenues in the quarter under review. An increase in daily average revenue trades further aided the results. The capital position also remained strong. However, higher expenses hurt results to some extent.

Raymond James’ (RJF - Free Report) first-quarter fiscal 2022 (ended Dec 31) adjusted earnings of $2.12 per share easily outpaced the Zacks Consensus Estimate of $1.77. The bottom line was up 42% from the prior-year quarter.

RJF’s results benefited from an impressive performance of the Capital Markets and Asset Management segments, which majorly drove revenues. A rise in assets balance, provision benefit and a strong balance sheet position were the other tailwinds. However, higher operating expenses posed an undermining factor.