LPL Financial Holdings Inc. (LPLA) Fourth Quarter Earnings and Revenue Beat Estimates

This story originally appeared on Zacks

LPL Financial Holdings Inc. (LPLA) posted quarterly earnings of $1.63 per share, beating Zacks consensus estimate of $1.54 per share. That compares to earnings of $1.53 per share a year ago. These figures are adjusted for non-recurring items.

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This quarterly report represents an earnings surprise of 5.84%. A quarter ago, this company was expected to post earnings of $1.73 per share when it actually produced earnings of $1.77, delivering a surprise 2.31%.

In the past four quarters, the company has exceeded consensus EPS estimates four times.

LPL Financial Holdings Inc., which is part of the Zacks Financial – Investment Bank segment, posted revenue of $2.09 billion for the quarter ended December 2021, beating Zacks’ consensus estimate of 2.11%. That compares to revenues of $1.58 billion a year ago. The company has exceeded consensus revenue estimates only once in the past four quarters.

The sustainability of the immediate stock price movement based on recently released numbers and future earnings forecasts will primarily depend on management’s comments on the earnings call.

Shares of LPL Financial Holdings Inc. have gained about 10.1% since the start of the year compared to the -3.7% decline in the S&P 500.

What’s next for LPL Financial Holdings Inc.

As LPL Financial Holdings Inc. has outperformed the market so far this year, the question on investors’ minds is: what’s next for the stock?

There is no easy answer to this key question, but a reliable measure that can help investors answer it is the company’s earnings outlook. This includes not only current consensus earnings expectations for the upcoming quarter(s), but also how those expectations have changed recently.

Empirical research shows a strong correlation between short-term stock movements and trends in earnings estimate revisions. Investors can track these revisions on their own or rely on a proven scoring tool like Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Prior to this earnings release, the trend in estimate revisions for LPL Financial Holdings Inc. is favourable. While the magnitude and direction of estimate revisions may change following the release of the company’s earnings report, the current situation results in a Zacks No. 2 (buy) ranking for the stock. Thus, stocks are expected to outperform the market in the near future. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how the estimates for the next few quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $2.25 on $2.15 billion in revenue for the upcoming quarter and $9.69 on $9.21 billion in revenue for the current fiscal year.

Investors should be aware that the outlook for the sector can also have a significant impact on stock performance. In terms of Zacks industry ranking, Financial – Investment Bank is currently in the top 8% of Zacks 250+ industries. Our research shows that the top 50% of industries ranked by Zacks outperform the bottom 50% by a factor of more than 2 to 1.

Another stock in the same sector, BGC Partners (BGCP), has not yet released its results for the quarter ended December 2021. The results are expected to be published on February 16.

This brokerage firm is expected to post quarterly earnings of $0.17 per share in its next report, representing a year-over-year change of +30.8%. The consensus EPS estimate for the quarter has been revised up 2.5% in the past 30 days from the current level.

BGC Partners revenue is expected to be $485.95 million, up 1.4% from the prior year quarter.

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