It has been about a month since the last earnings report for LPL Financial Holdings Inc. (LPLA Quick QuoteLPLA - Free Report) . Shares have added about 2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is LPL Financial Holdings Inc. due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

LPL Financial Q2 Earnings Top Estimates as Revenues Rise Y/Y

LPL Financial’s second-quarter 2022 adjusted earnings of $2.24 per share surpassed the Zacks Consensus Estimate of $2.01. The bottom line also reflects a 21% jump from the prior-year quarter.

Results benefited from an improvement in revenues and robust assets balance, which were partly offset by higher expenses. Further, LPLA’s balance sheet position remained strong.

After considering the amortization of intangible assets and acquisition costs, net income was $161 million or $1.97 per share, up from $119 million or $1.46 per share in the year-ago quarter.

Matt Audette, the chief financial officer of LPLA, said, “We recorded double-digit organic growth, while successfully onboarding CUNA, substantially completing the integration of Waddell & Reed, and signing an agreement to acquire Boenning & Scattergood. Additionally, we are looking forward to onboarding People’s United Bank later this year.”

Revenues Improve, Expenses Rise

Total net revenues were $2.04 billion, up 7% year over year. An increase in all components of revenues, except for commissions and other revenues, drove the rise.

Total expenses increased 5% to $1.83 billion. All expense components increased in the quarter, except for professional services.

As of Jun 30, 2022, LPL Financial’s total brokerage and advisory assets were $1,064.6 billion, down 4% year over year.

In the second quarter, total net new assets were $37.2 billion, down from $106 billion in the prior-year quarter. Total client cash balances grew 44% to $69.6 billion.

Balance Sheet Position Strong

As of Jun 30, 2022, total assets were $7.74 billion, down modestly on a sequential basis. As of the same date, cash and cash equivalents totaled $700.4 million, down 31% from the end of the previous quarter.

Total stockholders’ equity was $1.84 billion as of Jun 30, 2022, up 6% from the end of the prior quarter.

Share Repurchase Update

In the quarter, the company repurchased 272,000 shares for $50 million.

Outlook

LPL Financial expects total onboarding and integration costs in relation to the acquisition of Waddell & Reed to be $100 million in the 12 months following the closure. With $92 million already incurred, the company expects $8 million to be incurred in the second half of 2022.

The company expects up to $20 million of additional core general and administration (G&A) expenses in 2022. This increases its 2022 core G&A outlook to $1,170-$1,195 million from the previously stated $1,150-$1,175 million. The updated outlook represents 10.5 year-over-year growth.

In third-quarter 2022, promotional costs are expected to increase to $105 million, primarily driven by conference spend. Depreciation and amortization costs are anticipated to increase by up to $5 million sequentially, while interest expenses will likely increase to $33 million, primarily driven by the increase in LIBOR.

The third-quarter payout ratio is expected to be roughly 88%, driven by the typical seasonal build in the production bonus as well as the onboarding of CUNA. Insured cash account (ICA) yield is expected to increase to approximately 195 bps.

In the third quarter of 2022, service and fee revenues are expected to increase by roughly $10 million sequentially, driven by revenues from the National Adviser Conference and IRA. Given the seasonal decline in July volumes, transaction revenue is anticipated to decline by $10 million sequentially.

In the third quarter, share repurchases are expected to increase to $75 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

VGM Scores

At this time, LPL Financial Holdings Inc. has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. It comes with little surprise LPL Financial Holdings Inc. has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

LPL Financial Holdings Inc. is part of the Zacks Financial - Investment Bank industry. Over the past month, Raymond James Financial, Inc. (RJF Quick QuoteRJF - Free Report) , a stock from the same industry, has gained 4.3%. The company reported its results for the quarter ended June 2022 more than a month ago.

Raymond James Financial, Inc. reported revenues of $2.72 billion in the last reported quarter, representing a year-over-year change of +10%. EPS of $1.61 for the same period compares with $1.83 a year ago.

For the current quarter, Raymond James Financial, Inc. is expected to post earnings of $2.06 per share, indicating no change from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Raymond James Financial, Inc. Also, the stock has a VGM Score of A.