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LPL Financial’s (LPLA - Free Report) fourth-quarter 2022 adjusted earnings of $4.21 per share surpassed the Zacks Consensus Estimate of $4.00. The bottom line reflects substantial jump from $1.63 in the prior-year quarter.
Results benefited from an improvement in revenues and lower expenses. However, LPLA recorded a decline in brokerage and advisory assets, which hurt the results to some extent.
After considering the amortization of intangible assets and acquisition costs, net income was $319.1 million or $3.95 per share, up from $232.3 million or $2.86 per share.
For 2022, adjusted earnings of $11.52 per share surpassed the Zacks Consensus Estimate of $11.32 and grew 64.1% year over year. Net income (GAAP basis) was $845.7 million or $10.40 per share, up from $459.9 million or $5.63 per share in 2021.
Revenues Improve, Expenses Decline
Total net revenues of $2.33 billion surpassed the Zacks Consensus Estimate of $2.28 billion and increased 11.4% year over year.
In 2022, net revenues were $8.6 billion, rising 11.4%. The top line matched the Zacks Consensus Estimate.
Total expenses decreased 2.3% to $1.91 billion.
As of Dec 31, 2022, LPL Financial’s total brokerage and advisory assets were $1,110.8 billion, down 7.9%.
In the fourth quarter, total net new assets were $21.3 billion, down from $26.2 billion. Total client cash balances grew 12.3% to $64.1 billion.
Balance Sheet Position Weakens
As of Dec 31, 2022, total assets were $9.5 billion, down 2.3% on a sequential basis. As of the same date, cash and cash equivalents totaled $847.5 million, down 30.5%.
Total stockholders’ equity was $2.2 billion as of Dec 31, 2022, up 8.4% from prior-quarter end.
Share Repurchase Update
In the reported quarter, the company repurchased shares for $150 million.
LPLA plans to repurchase shares worth $250 million in the first quarter of 2023.
Dividend Hike
LPLA's board of directors declared a dividend of 30 cents per share, up 20% from the last paid out. The dividend will be paid on Mar 28 to stockholders of record as on Mar 14.
Our View
LPL Financial’s recruiting efforts and solid advisor productivity will likely continue aiding advisory revenues. Strategic buyouts, including Boenning & Scattergood’s private client group business and Financial Resources Group Investment Services in January 2023 will keep supporting financials. However, declining brokerage and advisory assets balance is concerning.
LPL Financial Holdings Inc. Price, Consensus and EPS Surprise
Charles Schwab’s (SCHW - Free Report) fourth-quarter 2022 adjusted earnings of $1.07 per share missed the Zacks Consensus Estimate of $1.10. The bottom line, however, soared 24% from the prior-year quarter. Our estimate for adjusted earnings were $1.05 per share.
Results of SCHW benefited from higher rates, which led to a rise in net interest income. Thus, revenues witnessed an improvement despite higher volatility affecting trading income.
Also, the absence of fee waivers and solid brokerage account numbers acted as tailwinds during the quarter. However, higher expenses were headwinds.
Interactive Brokers Group’s (IBKR - Free Report) fourth-quarter 2022 adjusted earnings per share of $1.30 handily surpassed the Zacks Consensus Estimate of $1.16 and increased 56.6% from the prior-year quarter.
Results of IBKR were primarily aided by an improvement in revenues. Also, the capital position was strong. However, higher expenses and a fall in daily average revenue trades were headwinds.
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LPL Financial (LPLA) Q4 Earnings Beat, Revenue Rises Y/Y
LPL Financial’s (LPLA - Free Report) fourth-quarter 2022 adjusted earnings of $4.21 per share surpassed the Zacks Consensus Estimate of $4.00. The bottom line reflects substantial jump from $1.63 in the prior-year quarter.
Results benefited from an improvement in revenues and lower expenses. However, LPLA recorded a decline in brokerage and advisory assets, which hurt the results to some extent.
After considering the amortization of intangible assets and acquisition costs, net income was $319.1 million or $3.95 per share, up from $232.3 million or $2.86 per share.
For 2022, adjusted earnings of $11.52 per share surpassed the Zacks Consensus Estimate of $11.32 and grew 64.1% year over year. Net income (GAAP basis) was $845.7 million or $10.40 per share, up from $459.9 million or $5.63 per share in 2021.
Revenues Improve, Expenses Decline
Total net revenues of $2.33 billion surpassed the Zacks Consensus Estimate of $2.28 billion and increased 11.4% year over year.
In 2022, net revenues were $8.6 billion, rising 11.4%. The top line matched the Zacks Consensus Estimate.
Total expenses decreased 2.3% to $1.91 billion.
As of Dec 31, 2022, LPL Financial’s total brokerage and advisory assets were $1,110.8 billion, down 7.9%.
In the fourth quarter, total net new assets were $21.3 billion, down from $26.2 billion. Total client cash balances grew 12.3% to $64.1 billion.
Balance Sheet Position Weakens
As of Dec 31, 2022, total assets were $9.5 billion, down 2.3% on a sequential basis. As of the same date, cash and cash equivalents totaled $847.5 million, down 30.5%.
Total stockholders’ equity was $2.2 billion as of Dec 31, 2022, up 8.4% from prior-quarter end.
Share Repurchase Update
In the reported quarter, the company repurchased shares for $150 million.
LPLA plans to repurchase shares worth $250 million in the first quarter of 2023.
Dividend Hike
LPLA's board of directors declared a dividend of 30 cents per share, up 20% from the last paid out. The dividend will be paid on Mar 28 to stockholders of record as on Mar 14.
Our View
LPL Financial’s recruiting efforts and solid advisor productivity will likely continue aiding advisory revenues. Strategic buyouts, including Boenning & Scattergood’s private client group business and Financial Resources Group Investment Services in January 2023 will keep supporting financials. However, declining brokerage and advisory assets balance is concerning.
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) fourth-quarter 2022 adjusted earnings of $1.07 per share missed the Zacks Consensus Estimate of $1.10. The bottom line, however, soared 24% from the prior-year quarter. Our estimate for adjusted earnings were $1.05 per share.
Results of SCHW benefited from higher rates, which led to a rise in net interest income. Thus, revenues witnessed an improvement despite higher volatility affecting trading income.
Also, the absence of fee waivers and solid brokerage account numbers acted as tailwinds during the quarter. However, higher expenses were headwinds.
Interactive Brokers Group’s (IBKR - Free Report) fourth-quarter 2022 adjusted earnings per share of $1.30 handily surpassed the Zacks Consensus Estimate of $1.16 and increased 56.6% from the prior-year quarter.
Results of IBKR were primarily aided by an improvement in revenues. Also, the capital position was strong. However, higher expenses and a fall in daily average revenue trades were headwinds.