Analyst Note| Michael Wong, CFA, CPA |
With the continued positive trajectory to the markets, deals that LPL Financial inked in 2020 are looking even better than before. The company reported net income of $112 million, or $1.38 per diluted share, on $552 million of gross profit in the fourth quarter. Gross profit declined 1% from the previous year but increased 6% sequentially. The year-over-year decline in gross profit is attributable to less revenue generated on client cash, while the sequential increase is from higher transaction and asset-based fees. For the full year, gross profit declined 3% to $2.1 billion, and diluted earnings per share declined 11% to $5.86. We don’t anticipate making a material change to our $108 fair value estimate for LPL Financial.