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LPL Financial (LPLA) Stock Gains 2.9% on Q1 Earnings Beat
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Shares of LPL Financial (LPLA - Free Report) gained 2.9%, following the release of its first-quarter 2020 results. Adjusted earnings of $2.06 per share surpassed the Zacks Consensus Estimate of $1.70. The figure reflected an increase of 7% from the prior-year quarter.
Revenue growth, partly offset by an increase in operating expenses aided results. Moreover, the balance sheet position remained strong in the quarter. However, lower total brokerage and advisory assets acted as headwinds.
After taking into consideration non-recurring items, net income was $155.6 million or $1.92 per share, increasing from $155.4 million or $1.79 per share recorded in the year-ago quarter.
Revenues Improve, Expenses Rise
Total net revenues were $1.46 billion, up 7% year over year. The rise was supported by an increase in almost all revenue components, except for asset-based revenues, and interest income, net of interest expenses. The reported figure surpassed the Zacks Consensus Estimate of $1.38 billion.
Total operating expenses increased 8% year over year to $1.23 billion. All expense components increased, except for professional services costs, communications and data processing costs, and other costs.
At the end of the first quarter, LPL Financial’s total brokerage and advisory assets were $669.9 billion, down 2% year over year.
Total net new assets were $12.5 billion at the end of the quarter, up from $4 billion recorded at the end of the prior-year quarter. Total client cash balances increased 56% year over year to $47.8 billion.
Balance Sheet Position Strong
As of Mar 31, 2020, the company had total assets of $6.11 billion, up 4% from the Dec 31, 2019 level. As of the same date, cash and cash equivalents totaled $418.2 million, down from $590.2 million as of Dec 31, 2019.
Also, total stockholders’ equity was $1.01 billion as of Mar 31, 2020, down from $1.02 billion recorded as of Dec 31, 2019.
Share Repurchase Update
LPL Financial repurchased $150 million worth of shares during the quarter.
Guidance
For 2020, management expects core G&A expenses in the lower half of $915-$940 million.
Our Viewpoint
LPL Financial delivered a decent performance in the first quarter. The company’s recruiting efforts and solid advisor productivity will likely continue to aid revenues. Notably, it announced a deal to acquire the assets of Lucia Securities.
However, persistently mounting expenses mainly due to higher compensation and benefits costs are expected to hurt the bottom line to an extent in the near term. Moreover, uncertainty about the performance of the capital markets remains a concern.
LPL Financial Holdings Inc. Price, Consensus and EPS Surprise
BlackRock, Inc.’s (BLK - Free Report) first-quarter 2020 adjusted earnings of $6.60 per share lagged the Zacks Consensus Estimate of $6.69. The figure was marginally lower than the year-ago quarter’s number.
Cohen & Steers’ (CNS - Free Report) first-quarter 2020 adjusted earnings of 61 cents per share missed the Zacks Consensus Estimate of 66 cents. However, the bottom line was 5.2% higher than the year-ago reported figure.
Affiliated Managers Group, Inc.’s (AMG - Free Report) first-quarter 2020 economic earnings of $3.16 per share surpassed the Zacks Consensus Estimate of $3.14. However, the bottom line declined 3.1% year over year.
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LPL Financial (LPLA) Stock Gains 2.9% on Q1 Earnings Beat
Shares of LPL Financial (LPLA - Free Report) gained 2.9%, following the release of its first-quarter 2020 results. Adjusted earnings of $2.06 per share surpassed the Zacks Consensus Estimate of $1.70. The figure reflected an increase of 7% from the prior-year quarter.
Revenue growth, partly offset by an increase in operating expenses aided results. Moreover, the balance sheet position remained strong in the quarter. However, lower total brokerage and advisory assets acted as headwinds.
After taking into consideration non-recurring items, net income was $155.6 million or $1.92 per share, increasing from $155.4 million or $1.79 per share recorded in the year-ago quarter.
Revenues Improve, Expenses Rise
Total net revenues were $1.46 billion, up 7% year over year. The rise was supported by an increase in almost all revenue components, except for asset-based revenues, and interest income, net of interest expenses. The reported figure surpassed the Zacks Consensus Estimate of $1.38 billion.
Total operating expenses increased 8% year over year to $1.23 billion. All expense components increased, except for professional services costs, communications and data processing costs, and other costs.
At the end of the first quarter, LPL Financial’s total brokerage and advisory assets were $669.9 billion, down 2% year over year.
Total net new assets were $12.5 billion at the end of the quarter, up from $4 billion recorded at the end of the prior-year quarter. Total client cash balances increased 56% year over year to $47.8 billion.
Balance Sheet Position Strong
As of Mar 31, 2020, the company had total assets of $6.11 billion, up 4% from the Dec 31, 2019 level. As of the same date, cash and cash equivalents totaled $418.2 million, down from $590.2 million as of Dec 31, 2019.
Also, total stockholders’ equity was $1.01 billion as of Mar 31, 2020, down from $1.02 billion recorded as of Dec 31, 2019.
Share Repurchase Update
LPL Financial repurchased $150 million worth of shares during the quarter.
Guidance
For 2020, management expects core G&A expenses in the lower half of $915-$940 million.
Our Viewpoint
LPL Financial delivered a decent performance in the first quarter. The company’s recruiting efforts and solid advisor productivity will likely continue to aid revenues. Notably, it announced a deal to acquire the assets of Lucia Securities.
However, persistently mounting expenses mainly due to higher compensation and benefits costs are expected to hurt the bottom line to an extent in the near term. Moreover, uncertainty about the performance of the capital markets remains a concern.
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 #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Companies
BlackRock, Inc.’s (BLK - Free Report) first-quarter 2020 adjusted earnings of $6.60 per share lagged the Zacks Consensus Estimate of $6.69. The figure was marginally lower than the year-ago quarter’s number.
Cohen & Steers’ (CNS - Free Report) first-quarter 2020 adjusted earnings of 61 cents per share missed the Zacks Consensus Estimate of 66 cents. However, the bottom line was 5.2% higher than the year-ago reported figure.
Affiliated Managers Group, Inc.’s (AMG - Free Report) first-quarter 2020 economic earnings of $3.16 per share surpassed the Zacks Consensus Estimate of $3.14. However, the bottom line declined 3.1% year over year.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>