Interactive Brokers (IBKR) AI Stock Analysis

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Interactive Brokers

(NASDAQ:IBKR)

74Outperform

Interactive Brokers' overall score is bolstered by strong financial performance and positive earnings guidance. The company's robust revenue growth, profitability metrics, and innovative product offerings are key strengths. However, technical indicators suggest caution, and operational challenges in cash flow and securities lending pose risks. The valuation appears fair, although the dividend yield is relatively low for income investors.

Positive Factors

Business Performance

Positive momentum across IBKR's business continues led by elevated account growth and overall levels of customer engagement.

Revenue Performance

Total adjusted net revenues exceeded expectations, driven by a significant gain from a partial sale of IBKR's stake in Tiger Brokers.

Negative Factors

Expense Management

Total non-interest expenses were significantly above estimates due to higher General and Administrative costs, including one-time charges.

Revenue Shortfall

Revenues came in modestly lower than expected, driven by a significant shortfall in Net Interest Income.

Interactive Brokers (IBKR) vs. S&P 500 (SPY)

Market Cap

$61.73B

Dividend Yield0.69%

Average Volume (3M)2.59M

Price to Earnings (P/E)21.1

Beta (1Y)0.94

Revenue Growth19.54%

EPS Growth22.23%

CountryUS

Employees2,998

SectorFinancial

Sector Strength82

IndustryFinancial - Capital Markets

Share Statistics

EPS (TTM)6.92

Shares Outstanding108,931,620

10 Day Avg. Volume2,204,724

30 Day Avg. Volume2,588,807

Financial Highlights & Ratios

PEG Ratio0.95

Price to Book (P/B)N/A

Price to Sales (P/S)3.64

Price to Cash Flow (P/CF)2.60

P/FCF Ratio1.60

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$215.43

Price Target Upside46.53% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering7

Interactive Brokers Business Overview & Revenue Model

Company DescriptionInteractive Brokers Group, Inc. operates as an automated electronic broker worldwide. The company specializes in executing, clearing, and settling trades in stocks, options, futures, foreign exchange instruments, bonds, mutual funds, exchange traded funds (ETFs), metals, and cryptocurrencies. It also custodies and services accounts for hedge and mutual funds, ETFs, registered investment advisors, proprietary trading groups, introducing brokers, and individual investors. In addition, it offers custody, prime brokerage, securities, and margin lending services. The company serves institutional and individual customers through approximately 150 electronic exchanges and market centers. Interactive Brokers Group, Inc. was founded in 1977 and is headquartered in Greenwich, Connecticut.

How the Company Makes MoneyInteractive Brokers makes money primarily through commissions and fees associated with trading activities. The company charges commissions on trades executed by its clients in various financial instruments, such as equities, options, futures, and forex. Additionally, Interactive Brokers generates revenue from interest income on margin loans provided to clients, who borrow funds to increase their buying power. The company also earns from fees for market data subscriptions, software usage, and account maintenance. Another significant revenue stream is the interest earned on segregated client funds and its proprietary investment activities. Moreover, Interactive Brokers benefits from partnerships with financial institutions and offers white-label solutions, further diversifying its income sources. The firm's competitive pricing, high-speed trading execution, and comprehensive platform contribute significantly to attracting and retaining a large and active client base.

Interactive Brokers Financial Statement Overview

Summary

Interactive Brokers demonstrates robust revenue growth and profitability metrics, which are significant strengths. However, challenges such as the recent negative EBITDA and the drop in operating cash flow highlight areas that require careful management. The company's balance sheet remains strong, with no debt and improving equity ratios.

Income Statement

Very Positive

Interactive Brokers shows a solid financial performance with high gross and net profit margins. Recent revenue growth has been strong, with a noticeable increase from the previous year. However, the negative EBITDA margin is a concern that needs addressing.

Balance Sheet

Positive

The company's balance sheet is stable with no debt and a healthy equity ratio. Return on equity has been improving, reflecting effective use of shareholders' equity. However, the relatively low stockholders' equity compared to total assets is a potential risk.

Cash Flow

Positive

The cash flow statement indicates fluctuations, with operating cash flow dropping to zero recently. While free cash flow has shown growth in past years, the current lack of positive operating cash flow is a concern that needs monitoring.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
5.18B	4.42B	3.17B	2.75B	2.24B
	Gross Profit
5.18B	3.51B	3.17B	2.75B	2.24B
	EBIT
4.18B	3.58B	2.10B	1.82B	1.38B
	EBITDA
-1.15B	6.68B	3.20B	2.12B	1.60B
	Net Income Common Stockholders
755.00M	600.00M	380.00M	308.00M	195.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
3.63B	3.75B	3.44B	2.45B	4.29B
	Total Assets
150.52B	128.42B	115.14B	108.95B	95.68B
	Total Debt
14.00M	11.36B	8.96B	11.80B	9.96B
	Net Debt
-3.62B	7.61B	5.52B	9.35B	5.66B
	Total Liabilities
133.92B	114.36B	103.53B	98.73B	86.68B
	Stockholders Equity
4.28B	3.58B	2.85B	2.40B	1.95B
Cash Flow		Free Cash Flow
8.68B	4.50B	3.90B	5.82B	8.02B
	Operating Cash Flow
8.72B	4.54B	3.97B	5.90B	8.07B
	Investing Cash Flow
-44.00M	-52.00M	-67.00M	-188.00M	-50.00M
	Financing Cash Flow
-833.00M	-624.00M	-470.00M	-523.00M	-229.00M

Interactive Brokers Technical Analysis

Technical Analysis Sentiment

Negative

Last Price147.02

Price Trends

50DMA

194.85

Negative

100DMA

190.23

Negative

200DMA

161.03

Negative

Market Momentum

MACD

-8.15

Negative

RSI

42.94

Neutral

STOCH

33.99

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For IBKR, the sentiment is Negative. The current price of 147.02 is below the 20-day moving average (MA) of 167.58, below the 50-day MA of 194.85, and below the 200-day MA of 161.03, indicating a bearish trend. The MACD of -8.15 indicates Negative momentum. The RSI at 42.94 is Neutral, neither overbought nor oversold. The STOCH value of 33.99 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for IBKR.

Interactive Brokers Risk Analysis

Interactive Brokers disclosed 38 risk factors in its most recent earnings report. Interactive Brokers reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Interactive Brokers Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
JPM	79 Outperform	$599.60B	10.86	17.28%	2.24%	17.07%	21.78%
GS	75 Outperform	$144.68B	11.48	11.95%	2.52%	14.80%	77.97%
IBKR	74 Outperform	$61.73B	21.09	19.20%	0.69%	19.54%	22.23%
SCHW	72 Outperform	$128.76B	23.12	13.30%	1.46%	1.87%	17.63%
AMTD	71 Outperform	$1.06B	―	11.11%	―	―	―
MS	67 Neutral	$161.01B	12.56	13.16%	3.59%	7.16%	53.77%
Sector *	64 Neutral	$12.70B	9.08	9.19%	4.89%	16.29%	-8.64%

* Financial Sector Average

Performance Comparison

IBKR

Interactive Brokers

147.02

36.64

33.19%

JPM

JPMorgan Chase & Co.

216.87

24.19

12.55%

Morgan Stanley

100.31

9.25

10.16%

SCHW

Charles Schwab

69.93

-1.34

-1.88%

Goldman Sachs Group

462.22

60.38

15.03%

AMTD

AMTD IDEA Group

1.00

-0.87

-46.52%

Interactive Brokers Earnings Call Summary

Earnings Call Date: Jan 21, 2025 | % Change Since: -23.66% | Next Earnings Date: Apr 15, 2025

Earnings Call Sentiment Positive

The earnings call was largely positive, with record account growth, financial performance, and innovative product enhancements. However, challenges in securities lending and concerns over cryptocurrency regulations were noted.

Highlights

Record Account Growth

Interactive Brokers added 775,000 accounts in 2024, with 217,000 added in Q4 alone, marking a record number of annual additions.

Increased Client Equity

Client equity rose by 33% to $568 billion, surpassing half a trillion dollars for the first time.

Record Financial Performance

Quarterly pretax income exceeded $1 billion for the first time, with a GAAP pretax margin of 75%. Full-year net revenues surpassed $5 billion with a 71% pretax margin, the highest in the brokerage industry.

Innovative Product Enhancements

Introduced multiple new products and features, including a generative AI commentary builder, a tax loss harvesting tool, and expanded trading hours for various asset classes.

International Expansion

Launched trading on the Saudi Exchange and expanded offerings in Europe with accounts like PEA in France.

Lowlights

Challenges in Securities Lending

Securities lending faced challenges due to fewer hard-to-borrow names and a dip in typical drivers like IPOs and market volatility.

Uncertain Crypto Regulations

Concerns about unclear regulatory environment for cryptocurrencies, which may affect future offerings.

Litigation Expenses

General and administrative expenses increased by 49% primarily due to a one-time litigation expense.

Company Guidance

During the IBKR Fourth Quarter 2024 earnings call, the company provided impressive guidance, highlighting significant growth metrics. Interactive Brokers added a record 775,000 accounts in 2024, with 217,000 in the fourth quarter alone. Client equity surged by 33% to $568 billion, surpassing $0.5 trillion for the first time. The company achieved a record quarterly pretax income exceeding $1 billion, with a GAAP pretax margin of 75%. For 2024, net revenues topped $5 billion, with a pretax margin of 71%, recognized as the highest in the brokerage industry. The firm expanded its product offerings, including new liquidity providers for options and support for overnight trading. Additionally, they demonstrated a strong global presence, with the majority of accounts based outside the U.S. and applications translated into 13 languages. The company remains optimistic about continued growth and innovation in 2025.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.