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LPL Financial’s (LPLA - Free Report) third-quarter 2022 adjusted earnings of $3.13 per share surpassed the Zacks Consensus Estimate of $2.84. The bottom line reflects a 77% jump from the prior-year quarter.
Results benefited from an improvement in revenues and marginally lower expenses. The balance sheet position remained strong in the quarter. However, LPLA recorded a decline in brokerage and advisory assets, which hurt the results to some extent. Probably because of this, shares of the company lost 2.9% in after-market trading following the release of the results.
After considering the amortization of intangible assets and acquisition costs, net income was $232.3 million or $2.86 per share, up from $103.1 million or $1.26 per share in the year-ago quarter.
Revenues Improve, Expenses Decline Marginally
Total net revenues were $2.16 billion, up 7% year over year. An increase in all components of revenues, except for advisory revenues, commission income and other revenues, drove the rise.
Total expenses declined almost 1% to $1.86 billion. The fall was due to a decrease in advisory and commission costs, promotional costs, brokerage, clearing and exchange costs, and other expenses.
As of Sep 30, 2022, LPL Financial’s total brokerage and advisory assets were $1,038.4 billion, down 8% year over year.
In the third quarter, total net new assets were $19.9 billion, down from $29 billion in the prior-year quarter. Total client cash balances grew 32% year over year to $66.8 billion.
Balance Sheet Position Strong
As of Sep 30, 2022, total assets were $9.70 billion, up 25% on a sequential basis. As of the same date, cash and cash equivalents totaled $1.22 billion, up 74% from the end of the previous quarter.
Total stockholders’ equity was $2 billion as of Sep 30, 2022, up 8% from the end of the prior quarter.
Share Repurchase Update
In the reported quarter, the company repurchased 366,000 shares for $75 million.
LPLA plans to increase share repurchases in the fourth quarter to $150 million.
Our View
LPL Financial’s recruiting efforts and solid advisor productivity will likely continue aiding advisory revenues. Strategic buyouts, including the planned acquisition of Boenning & Scattergood’s private client group business, will keep supporting financials. However, elevated expenses are expected to hurt the company’s bottom line.
LPL Financial Holdings Inc. Price, Consensus and EPS Surprise
Charles Schwab’s (SCHW - Free Report) third-quarter 2022 adjusted earnings of $1.10 per share handily beat the Zacks Consensus Estimate of $1.05. The bottom line rose 31% from the prior-year quarter.
SCHW’s results benefited from higher rates, which led to a rise in net interest income. Thus, revenues witnessed an improvement despite higher volatility hurting the trading income. Also, the absence of fee waivers and solid brokerage account numbers acted as tailwinds in the quarter. However, higher expenses were a headwind for SCHW.
Interactive Brokers Group’s (IBKR - Free Report) third-quarter 2022 adjusted earnings per share of $1.08 handily surpassed the Zacks Consensus Estimate of 99 cents. The bottom line reflects a rise of 38.5% from the prior-year quarter.
IBKR’s results were primarily aided by an improvement in revenues. Also, the capital position remained strong. However, higher expenses and a fall in daily average revenue trades were headwinds.
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LPL Financial (LPLA) Stock Declines Despite Q3 Earnings Beat
LPL Financial’s (LPLA - Free Report) third-quarter 2022 adjusted earnings of $3.13 per share surpassed the Zacks Consensus Estimate of $2.84. The bottom line reflects a 77% jump from the prior-year quarter.
Results benefited from an improvement in revenues and marginally lower expenses. The balance sheet position remained strong in the quarter. However, LPLA recorded a decline in brokerage and advisory assets, which hurt the results to some extent. Probably because of this, shares of the company lost 2.9% in after-market trading following the release of the results.
After considering the amortization of intangible assets and acquisition costs, net income was $232.3 million or $2.86 per share, up from $103.1 million or $1.26 per share in the year-ago quarter.
Revenues Improve, Expenses Decline Marginally
Total net revenues were $2.16 billion, up 7% year over year. An increase in all components of revenues, except for advisory revenues, commission income and other revenues, drove the rise.
Total expenses declined almost 1% to $1.86 billion. The fall was due to a decrease in advisory and commission costs, promotional costs, brokerage, clearing and exchange costs, and other expenses.
As of Sep 30, 2022, LPL Financial’s total brokerage and advisory assets were $1,038.4 billion, down 8% year over year.
In the third quarter, total net new assets were $19.9 billion, down from $29 billion in the prior-year quarter. Total client cash balances grew 32% year over year to $66.8 billion.
Balance Sheet Position Strong
As of Sep 30, 2022, total assets were $9.70 billion, up 25% on a sequential basis. As of the same date, cash and cash equivalents totaled $1.22 billion, up 74% from the end of the previous quarter.
Total stockholders’ equity was $2 billion as of Sep 30, 2022, up 8% from the end of the prior quarter.
Share Repurchase Update
In the reported quarter, the company repurchased 366,000 shares for $75 million.
LPLA plans to increase share repurchases in the fourth quarter to $150 million.
Our View
LPL Financial’s recruiting efforts and solid advisor productivity will likely continue aiding advisory revenues. Strategic buyouts, including the planned acquisition of Boenning & Scattergood’s private client group business, will keep supporting financials. However, elevated expenses are expected to hurt the company’s bottom line.
LPL Financial Holdings Inc. Price, Consensus and EPS Surprise
LPL Financial Holdings Inc. price-consensus-eps-surprise-chart | LPL Financial Holdings Inc. Quote
Currently, LPL Financial carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Brokerage Firms
Charles Schwab’s (SCHW - Free Report) third-quarter 2022 adjusted earnings of $1.10 per share handily beat the Zacks Consensus Estimate of $1.05. The bottom line rose 31% from the prior-year quarter.
SCHW’s results benefited from higher rates, which led to a rise in net interest income. Thus, revenues witnessed an improvement despite higher volatility hurting the trading income. Also, the absence of fee waivers and solid brokerage account numbers acted as tailwinds in the quarter. However, higher expenses were a headwind for SCHW.
Interactive Brokers Group’s (IBKR - Free Report) third-quarter 2022 adjusted earnings per share of $1.08 handily surpassed the Zacks Consensus Estimate of 99 cents. The bottom line reflects a rise of 38.5% from the prior-year quarter.
IBKR’s results were primarily aided by an improvement in revenues. Also, the capital position remained strong. However, higher expenses and a fall in daily average revenue trades were headwinds.