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LPL Financial Holdings Inc LPLA

Morningstar Rating
$262.65 +6.15 (2.40%)
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Company Report

LPL Financial: Acquiring Atria Wealth Solutions for a Reasonable Price

LPL Financial announced that it’s acquiring Atria Wealth Solutions. Atria has about 2,400 advisors and works with about 150 financial institutions with $100 billion of client assets, which compares with LPL at the end of the fourth quarter of 2023, with 22,660 advisors and $1.35 trillion of client assets. LPL is paying about $805 million, but there’s also an additional $230-million earnout based on how many Atria advisors are retained and an expected $300 million-$350 million of onboarding and integration costs. With an 80% retention rate, LPL estimates that the acquisition will generate $140 million of run-rate EBITDA. At the low end, LPL would be paying about $1.1 billion for Atria, including $300 million of integration and onboarding costs, which seems reasonable compared with the $140 million of run-rate EBITDA. LPL plans to partially fund the acquisition with debt, which will raise its net debt/EBITDA ratio to about 2 times, and the company intends to pause share repurchases until the acquisition is closed in the back half of 2024. We will be remodeling narrow-moat-rated LPL Financial assuming that this acquisition goes through, but currently don’t anticipate it will lead to a significant change to our $289 fair value estimate for the company.

Price vs Fair Value

LPLA is trading at a 9% discount.
Price
$262.65
Fair Value
$781.00
Uncertainty
High
1-Star Price
$265.56
5-Star Price
$238.20
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

LPL Financial has expanded the number of advisor business models it supports, which increases its addressable market.

Bears

LPL’s decision to add an employee channel for advisors could distract management.

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News

Trading Information

Previous Close Price
$256.50
Day Range
$257.67263.92
52-Week Range
$179.00264.24
Bid/Ask
$105.06 / $417.61
Market Cap
$19.61 Bil
Volume/Avg
470,147 / 644,343

Key Statistics

Price/Earnings (Normalized)
15.57
Price/Sales
1.98
Dividend Yield (Trailing)
0.46%
Dividend Yield (Forward)
0.46%
Total Yield
6.08%

Company Profile

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. As of the end of 2022, the company had nearly 20,000 advisors on its platform managing over $1 trillion of client assets.
Sector
Financial Services
Industry
Capital Markets
Stock Style Box
Mid Growth
Total Number of Employees
8,400

Competitors

Valuation

Metric
LPLA
AMP
RJF
Price/Earnings (Normalized)
15.5713.7713.88
Price/Book Value
9.168.292.27
Price/Sales
1.982.722.15
Price/Cash Flow
11.5515.6111.73
Price/Earnings
LPLA
AMP
RJF

Financial Strength

Metric
LPLA
AMP
RJF
Quick Ratio
1.01
Current Ratio
1.71
Interest Coverage
8.7310.98
Quick Ratio
LPLA
AMP
RJF

Profitability

Metric
LPLA
AMP
RJF
Return on Assets (Normalized)
12.77%1.97%2.31%
Return on Equity (Normalized)
57.46%79.78%18.04%
Return on Invested Capital (Normalized)
25.01%7.92%
Return on Assets
LPLA
AMP
RJF
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