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Interactive Brokers Group Inc Class A IBKR

Morningstar Rating
$106.76 +1.70 (1.62%)
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Company Report

Interactive Brokers Update: Slightly Increasing Fair Value Estimate to $117

Interactive Brokers is a unique brokerage within our coverage. The firm serves a more niche client base. Apart from retail investors, the company also caters to the trading of institutional clients like hedge and mutual funds, proprietary trading groups, introducing brokers, and financial advisors. The commission mix between retail and institutional clients is about 55%/45%. Most of Interactive Brokers' clients still choose to pay commissions when many other retail brokerages switched to a zero-commission model for U.S. stock trading. The clients of Interactive Brokers are more sophisticated compared with the clients of Charles Schwab, TD Ameritrade, and E-Trade. To be more specific, they trade more frequently, maintain higher cash balances to make opportunistic moves, and take use of leverage. These trading-savvy customers are attracted by Interactive Brokers’ low margin rates, comprehensive trading platform, sophisticated trading execution capabilities, and high interest paid on idle cash.

Price vs Fair Value

IBKR is trading at a 9% discount.
Price
$106.76
Fair Value
$752.00
Uncertainty
High
1-Star Price
$755.17
5-Star Price
$98.80
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Interactive Brokers’ short duration in its investment portfolio benefits from currently high interest rates.

Bears

Lower interest rates for an extended period would be detrimental to Interactive Brokers’ net interest income. If a recession occurs, the Fed might feel obligated to lower rates.

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News

Trading Information

Previous Close Price
$105.06
Day Range
$105.15107.34
52-Week Range
$70.83107.34
Bid/Ask
$106.51 / $110.00
Market Cap
$11.42 Bil
Volume/Avg
170 / 1.4 Mil

Key Statistics

Price/Earnings (Normalized)
18.31
Price/Sales
1.37
Dividend Yield (Trailing)
0.37%
Dividend Yield (Forward)
0.37%
Total Yield
0.37%

Company Profile

Interactive Brokers is an online brokerage that generates trading commissions (around 31% of net revenue) from facilitating trading in a wide range of products, including equity, options, futures, foreign exchange, bonds, mutual funds, and ETFs. Interactive Brokers also generates net interest income (about 64% of net revenue) from idle client cash and earns fees (about 6% of net revenue) from ancillary services. Principal trading and other miscellaneous activities are small (about 4% of net revenue). The firm derives about 70% of its net revenue from the U.S. and 30% from international markets.
Sector
Financial Services
Industry
Capital Markets
Stock Style Box
Mid Growth
Total Number of Employees
2,918

Competitors

Valuation

Metric
IBKR
MS
LPLA
Price/Earnings (Normalized)
18.3114.2615.57
Price/Book Value
3.021.529.16
Price/Sales
1.372.731.98
Price/Cash Flow
3.658.8311.55
Price/Earnings
IBKR
MS
LPLA

Financial Strength

Metric
IBKR
MS
LPLA
Quick Ratio
0.511.01
Current Ratio
1.121.71
Interest Coverage
1.988.73
Quick Ratio
IBKR
MS
LPLA

Profitability

Metric
IBKR
MS
LPLA
Return on Assets (Normalized)
0.49%0.97%12.77%
Return on Equity (Normalized)
19.21%12.60%57.46%
Return on Invested Capital (Normalized)
15.16%25.01%
Return on Assets
IBKR
MS
LPLA
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Capital Markets Industry Comparables

Ticker
Name
Morningstar Rating for Stocks
Economic Moat
Market Cap
MS
Morgan StanleyNnvynb$140.9 Bil
GS
The Goldman Sachs Group IncLgpsfnh$127.3 Bil
SCHW
Charles Schwab CorpVpkm$117.8 Bil
RJF
Raymond James Financial IncKqtd$24.8 Bil
TW
Tradeweb Markets IncHjmr$22.2 Bil
LPLA
LPL Financial Holdings IncFdgnff$19.6 Bil
MKTX
MarketAxess Holdings IncPzjdc$8.1 Bil
SF
Stifel Financial CorpWvkc$7.9 Bil
EVR
Evercore Inc Class ARwsdmw$7.0 Bil

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