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After Interactive Brokers reported its October results, we updated our profit projections to account for the company nearly doubling its dividend. We added regulatory fee increases to what we track, as these costs can hide how well the automated system is performing. We also reset our expectations for customer equity growth and profit margins after both exceeded the targets we set for the business.
Barclays raised its price target to $117 from $115 and kept its positive rating. Other firms moved their targets as well, with BMO Capital lowering its target to $100 while Deutsche Bank nudged its own up to $104. These adjustments follow a quarter where the company showed steady growth in its account base. The new average target of $105 suggests analysts still see room for the stock to rise from its current price of about $83.
Source: UBS
The company reported adjusted earnings of $0.67 per share, slightly ahead of the $0.668 analysts expected. Revenue grew to $1.91 billion, driven by higher commissions and the interest earned on customer cash. Management also nearly doubled the quarterly dividend from about $0.09 to $0.15 per share.
This performance shows the business continues to grow its earnings even as it waits for a final decision on its bank charter. By returning more cash to shareholders through the dividend, the company is signaling confidence that its automated, low-cost model can keep generating high profits.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
The firm launched cryptocurrency staking, a process where investors earn rewards for helping to validate transactions on a blockchain network. This service is now available to eligible clients, adding to the company's existing crypto trading options.
While crypto is a small part of the overall business, adding staking helps the company compete for younger, tech-savvy investors. It keeps the platform relevant as a one-stop shop for both traditional stocks and newer digital assets.
Source: Business Wire
The company ended September with $964.7 billion in client equity, a significant jump from the same time last year. Daily average revenue trades, which measure how often customers are making trades that generate fees, rose 6 percent year-over-year but fell 4 percent compared to August. Steady growth in total assets is a healthy sign for the long term. Even when trading activity fluctuates month-to-month, a larger pool of client cash allows the company to earn more interest income, which is a major driver of its total profit.
Source: Business Wire
Management has cleared the bar for six straight quarters, usually by a small margin. This suggests they have a firm handle on their costs and a reliable way to forecast their growth.
| Expectation | |
|---|---|
| EPS | $0.72 |
| Revenue | $2.00B |
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