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LPL Financial Holdings Inc LPLA

Rating as of

Morningstar’s Analysis

Valuation
Currency in USD
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Earnings From Partnerships Are Beginning Their Ramp at LPL Financial

Michael Wong, CFA, CPA Sector Director

Analyst Note

| Michael Wong, CFA, CPA |

LPL Financial reported another quarter of record client assets due to strong organic growth and onboarding some assets related to a partnership with BMO Harris Bank. Assets should continue their strong growth over the next several quarters as the company onboards assets from M&T Bank and Waddell & Reed. LPL reported net income of $130 million, or $1.59 per diluted share, on $579 million of gross profit. Gross profit increased 8.5% sequentially but was flat from a year ago. Record client assets of $958 billion, up 6% sequentially and 43% from a year ago, have produced growth in asset-based fees and commission revenue, but revenues from client cash remain a drag. Client cash-related revenue comes with high operating margins for wealth management firms, and it declined $8 million sequentially and $54 million from a year ago. We don’t anticipate making a material change to our $134 fair value estimate for narrow-moat LPL Financial.

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Company Profile

Business Description

LPL Financial Holdings is an independent broker/dealer that provides a platform of proprietary technology, brokerage, and investment advisory services to financial advisors and institutions. The company also provides financial advisors licensed with insurance companies customized clearing services, advisory platforms, and technology solutions. LPL provides a range of services through its subsidiaries. Private Trust supplies trust administration, investment management oversight, and custodial services for estates and families; Independent Advisers Group offers investment advisory solutions to insurance companies; and LPL Insurance Associates operates as a brokerage general agency that offers life, long-term care, and disability insurance sales and services.

Contact
4707 Executive Drive
San Diego, CA, 92121
T +1 800 877-7210
Sector Financial Services
Industry Capital Markets
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 4,815

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