LPL Financial (LPLA) First quarter earnings beat, revenue and costs rise

LPL FinancialFirst-quarter 2022 LPLA adjusted earnings of $1.95 per share beat Zacks’ consensus estimate of $1.79. Net income reflects a 10% increase over the prior year quarter.

Results benefited from improved revenues, partially offset by higher expenses. In addition, the company’s balance sheet position remained strong.

After taking into account amortization of intangible assets and acquisition costs, net income was $133.7 million or $1.64 per share, compared to $129.6 million or 1, $59 per share in the prior year quarter.

Revenue improves, expenses increase

Total net revenue was $2.07 billion, up 21% year over year. An increase in all income components, except other income, drove the increase. The top line missed the Zacks consensus estimate of $2.20 billion.

Total spending increased 23% to $1.89 billion. All expense components increased during the quarter except for the loss on extinguishment of debt.

As of March 31, 2022, LPL Financial’s total brokerage and advisory assets were $1,163.1 billion, up 21% year-over-year.

In the first quarter, total net new assets were $17.6 billion, compared to $28.9 billion in the year-ago quarter. Total customer cash balances increased 28% year over year to $61.8 billion.

Strong balance sheet position

As of March 31, 2022, total assets were $7.77 billion, down 3% sequentially. As of the same date, cash and cash equivalents totaled $1.01 billion, up significantly from the end of the previous quarter.

Total equity was $1.74 billion as of March 31, 2022, up 4% from the end of the prior quarter.

Share buyback update

During the quarter, the company repurchased shares worth $50 million.

Our point of view

LPL Financial’s recruiting efforts and strong advisor productivity will likely continue to contribute to advisory revenue. Strategic buyouts, including the acquisition of Waddell & Reed’s wealth management business, will continue to support financials. However, the constant increase in expenses is 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 | Quote from LPL Financial Holdings Inc.

Currently, LPL Financial carries a Zacks rank #3 (Hold). You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of other brokerage firms

Charles SchwabSCHW’s adjusted first-quarter 2022 earnings of 77 cents per share missed Zacks’ consensus estimate by 85 cents. Net income was also down 8% from the prior year quarter.

Results were negatively impacted by increased market volatility, which impacted trading revenue. In addition, rising spending has been a headwind. However, lower fee waivers and growth in the number of brokerage accounts were tailwinds in the quarter.

Group of interactive brokersIBKR’s first-quarter 2022 adjusted earnings per share of 82 cents missed Zacks’ consensus estimate by a penny. Net income reflects a 16.3% decline from the prior year quarter.

IBKR reported lower revenue in the quarter under review. A decline in daily average earnings trading further hurt results. However, capital’s position remained strong. Lower spending was a tailwind.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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