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LPL Financial (LPLA) Q1 Earnings Beat, Revenues & Costs Rise

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LPL Financial’s (LPLA - Free Report) first-quarter 2022 adjusted earnings of $1.95 per share surpassed the Zacks Consensus Estimate of $1.79. The bottom line reflects a rise of 10% 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 considering the amortization of intangible assets and acquisition costs, net income was $133.7 million or $1.64 per share, up from $129.6 million or $1.59 per share in the year-ago quarter.

Revenues Improve, Expenses Rise

Total net revenues were $2.07 billion, jumping 21% year over year. An increase in all components of revenues, except for other revenues, drove the rise. The top line missed the Zacks Consensus Estimate of $2.20 billion.

Total expenses increased 23% to $1.89 billion. All expense components increased in the quarter, except for loss on extinguishment of debt.

As of Mar 31, 2022, LPL Financial’s total brokerage and advisory assets were $1,163.1 billion, rising 21% year over year.

In the first quarter, total net new assets were $17.6 billion, down from $28.9 billion in the prior-year quarter. Total client cash balances grew 28% year over year to $61.8 billion.

Balance Sheet Position Strong

As of Mar 31, 2022, total assets were $7.77 billion, down 3% sequentially. As of the same date, cash and cash equivalents totaled $1.01 billion, up significantly from the end of the previous quarter.

Total stockholders’ equity was $1.74 billion as of Mar 31, 2022, up 4% from the end of the prior quarter.

Share Repurchase Update

In the quarter, the company repurchased shares worth $50 million.

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 #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 2022 adjusted earnings of 77 cents per share missed the Zacks Consensus Estimate of 85 cents. The bottom line also declined 8% from the prior-year quarter.

Results were hurt by increased market volatility, thereby affecting trading income. Also, higher expenses were a headwind. However, lower fee waivers and growth in brokerage account numbers acted as tailwinds in the quarter.

Interactive Brokers Group’s (IBKR - Free Report) first-quarter 2022 adjusted earnings per share of 82 cents missed the Zacks Consensus Estimate by a penny. The bottom line reflects a decline of 16.3% from the prior-year quarter.

IBKR recorded a decline in revenues in the quarter under review. A fall in daily average revenue trades further hurt the results. However, the capital position remained strong. Lower expenses were a tailwind.


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