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Interactive Brokers Group, Inc. (IBKR) Down 1.4% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Interactive Brokers Group, Inc. (IBKR). Shares have lost about 1.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Interactive Brokers Group, Inc. due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Interactive Brokers Q3 Earnings Beat, Revenues Fall Y/Y

Interactive Brokers’ third-quarter 2021 adjusted earnings per share of 78 cents surpassed the Zacks Consensus Estimate of 75 cents. The bottom line reflects growth of 47.2% from the prior-year quarter.

The company recorded a decline in revenues and higher expenses in the quarter. Nevertheless, an increase in DARTs was witnessed, which aided results to an extent. Capital ratios also remained strong.

After considering non-recurring items, net income available to common shareholders (GAAP basis) was $42 million or 43 cents per share, down from $46 million or 58 cents per share in the prior-year quarter.

Interactive Brokers reported comprehensive income available to common shareholders of $33 million or 34 cents per share in the reported quarter compared with $54 million or 69 cents recorded in the prior-year quarter.

Revenues Decline, Expenses Rise

Total GAAP net revenues were $464 million, down 15.3% year over year. The top line missed the Zacks Consensus Estimate of $633 million. Adjusted net revenues were $650 million, up 25.5%.

Total non-interest expenses increased 7.5% year over year to $230 million. The rise was due to an increase in all cost components, except for execution, clearing and distribution fees, and customer bad debt.

Income before income taxes was $234 million, down 29.9% from the prior-year quarter.

Adjusted pre-tax profit margin was 65%, up from 59% a year ago.

In the reported quarter, total customer DARTs increased 24% year over year to 2.26 million. Total cleared DARTs jumped from 1.63 million to 2.02 million.

Additionally, customer accounts grew 57% from the year-ago quarter to 1,536,000.

Balance Sheet Position Strong

As of Sep 30, 2021, cash and cash equivalents (including cash and securities set aside for regulatory purposes) totaled $40.4 billion compared with $48 billion as of Dec 31, 2020.

As of Sep 30, 2021, total assets were $106.3 billion compared with $95.7 billion as of Dec 31, 2020. Total equity was $10 billion, up from $9 billion as of Dec 31, 2020.

Outlook

The company expects the next 25 bps unanticipated rise in interest rates to produce an additional $107 million in net interest income annually.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 5.11% due to these changes.

VGM Scores

Currently, Interactive Brokers Group, Inc. has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Interactive Brokers Group, Inc. has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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