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LPL Financial Holdings Inc LPLA

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Morningstar’s Analysis

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LPL’s Locked-In Client Asset Growth Continues to Improve

Michael Wong, CFA, CPA Sector Director

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.

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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.

4707 Executive Drive
San Diego, CA, 92121
T +1 800 877-7210
Sector Financial Services
Industry Capital Markets
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 4,756