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Interactive Brokers (IBKR) Stock Gains on Q3 Earnings Beat
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Shares of Interactive Brokers Group (IBKR - Free Report) gained 2.7% in after-market trading following its third-quarter 2022 results. Adjusted earnings per share of $1.08 handily surpassed the Zacks Consensus Estimate of 99 cents. The bottom line reflects a rise of 38.5% from the prior-year quarter.
Results were primarily aided by an improvement in revenues. Also, the capital position remained strong. However, higher expenses and a fall in daily average revenue trades (DARTs) were headwinds.
After considering non-recurring items, net income available to common shareholders (GAAP basis) was $99 million or 97 cents per share, up from $42 million or 43 cents per share in the prior-year quarter.
Interactive Brokers reported comprehensive income available to common shareholders of $69 million or 68 cents per share compared with $33 million or 34 cents in the prior-year quarter.
Revenues Improve, Expenses Rise
Total GAAP net revenues were $790 million, up 70.3% year over year. However, the top line missed the Zacks Consensus Estimate of $812.6 million. Adjusted net revenues were $847 million, up 30.3%.
Total non-interest expenses increased 16.1% year over year to $267 million. The rise was due to an increase in almost all cost components except for general and administrative costs.
Income before income taxes was $523 million, increasing significantly from the prior-year quarter’s $234 million.
The adjusted pre-tax profit margin was 68%, up from 65% a year ago.
In the reported quarter, total customer DARTs declined 15.2% year over year to 1.92 million. Total cleared DARTs decreased from 2.02 million to 1.71 million.
Customer accounts grew 31% from the year-ago quarter to 2,012,000.
Capital Position Strong
As of Sep 30, 2022, cash and cash equivalents (including cash and securities set aside for regulatory purposes) totaled $59.92 billion compared with $40.40 billion as of Dec 31, 2021.
As of Sep 30, 2022, total assets were $114.68 billion compared with $109.11 billion as of Dec 31, 2021. Total equity was $10.90 billion, up from $10.22 billion as of Dec 31, 2021.
Our Viewpoint
Interactive Brokers' efforts to develop proprietary software and an increase in emerging market customers are expected to keep aiding financials. Also, its efficient capital deployment activities indicate strong liquidity and capital positions. However, increasing expenses will likely hamper the bottom line to an extent in the near term.
Interactive Brokers Group, Inc. Price, Consensus and EPS Surprise
Performance of Another Company and Upcoming Release
Charles Schwab’s (SCHW - Free Report) third-quarter 2022 adjusted earnings of $1.10 per share handily beat the Zacks Consensus Estimate of $1.05. The bottom line rose 31% from the prior-year quarter.
SCHW’s results benefited from higher rates, which led to a rise in net interest income. Thus, revenues witnessed an improvement despite higher volatility hurting the trading income. Also, the absence of fee waivers and solid brokerage account numbers acted as tailwinds in the quarter. However, higher expenses were a headwind for SCHW.
Raymond James (RJF - Free Report) is scheduled to announce quarterly numbers on Oct 25.
Over the past 30 days, the Zacks Consensus Estimate for Raymond James’ quarterly earnings has been revised 1.5% lower to $2.03, suggesting a 1.5% decrease from the prior-year reported number.
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Interactive Brokers (IBKR) Stock Gains on Q3 Earnings Beat
Shares of Interactive Brokers Group (IBKR - Free Report) gained 2.7% in after-market trading following its third-quarter 2022 results. Adjusted earnings per share of $1.08 handily surpassed the Zacks Consensus Estimate of 99 cents. The bottom line reflects a rise of 38.5% from the prior-year quarter.
Results were primarily aided by an improvement in revenues. Also, the capital position remained strong. However, higher expenses and a fall in daily average revenue trades (DARTs) were headwinds.
After considering non-recurring items, net income available to common shareholders (GAAP basis) was $99 million or 97 cents per share, up from $42 million or 43 cents per share in the prior-year quarter.
Interactive Brokers reported comprehensive income available to common shareholders of $69 million or 68 cents per share compared with $33 million or 34 cents in the prior-year quarter.
Revenues Improve, Expenses Rise
Total GAAP net revenues were $790 million, up 70.3% year over year. However, the top line missed the Zacks Consensus Estimate of $812.6 million. Adjusted net revenues were $847 million, up 30.3%.
Total non-interest expenses increased 16.1% year over year to $267 million. The rise was due to an increase in almost all cost components except for general and administrative costs.
Income before income taxes was $523 million, increasing significantly from the prior-year quarter’s $234 million.
The adjusted pre-tax profit margin was 68%, up from 65% a year ago.
In the reported quarter, total customer DARTs declined 15.2% year over year to 1.92 million. Total cleared DARTs decreased from 2.02 million to 1.71 million.
Customer accounts grew 31% from the year-ago quarter to 2,012,000.
Capital Position Strong
As of Sep 30, 2022, cash and cash equivalents (including cash and securities set aside for regulatory purposes) totaled $59.92 billion compared with $40.40 billion as of Dec 31, 2021.
As of Sep 30, 2022, total assets were $114.68 billion compared with $109.11 billion as of Dec 31, 2021. Total equity was $10.90 billion, up from $10.22 billion as of Dec 31, 2021.
Our Viewpoint
Interactive Brokers' efforts to develop proprietary software and an increase in emerging market customers are expected to keep aiding financials. Also, its efficient capital deployment activities indicate strong liquidity and capital positions. However, increasing expenses will likely hamper the bottom line to an extent in the near term.
Interactive Brokers Group, Inc. Price, Consensus and EPS Surprise
Interactive Brokers Group, Inc. price-consensus-eps-surprise-chart | Interactive Brokers Group, Inc. Quote
Currently, Interactive Brokers carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Another Company and Upcoming Release
Charles Schwab’s (SCHW - Free Report) third-quarter 2022 adjusted earnings of $1.10 per share handily beat the Zacks Consensus Estimate of $1.05. The bottom line rose 31% from the prior-year quarter.
SCHW’s results benefited from higher rates, which led to a rise in net interest income. Thus, revenues witnessed an improvement despite higher volatility hurting the trading income. Also, the absence of fee waivers and solid brokerage account numbers acted as tailwinds in the quarter. However, higher expenses were a headwind for SCHW.
Raymond James (RJF - Free Report) is scheduled to announce quarterly numbers on Oct 25.
Over the past 30 days, the Zacks Consensus Estimate for Raymond James’ quarterly earnings has been revised 1.5% lower to $2.03, suggesting a 1.5% decrease from the prior-year reported number.