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Interactive Brokers Group, Inc. (IBKR) Down 2.4% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Interactive Brokers Group, Inc. (IBKR). Shares have lost about 2.4% 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 the most recent earnings report in order to get a better handle on the important catalysts.

Interactive Brokers Q2 Earnings Miss, Revenues Rise Y/Y

Interactive Brokers’ second-quarter 2021 adjusted earnings per share of 82 cents lagged the Zacks Consensus Estimate of 83 cents. However, the bottom line reflects growth of 43.9% from the prior-year quarter.

The company recorded a rise in revenues and lower expenses in the quarter. Also, an increase in DARTs was witnessed. Capital position remained strong.

After considering non-recurring items, net income available to common shareholders (GAAP basis) was $92 million or $1.00 per share, up from $32 million or 40 cents per share in the prior-year quarter.

Interactive Brokers reported comprehensive income available to common shareholders of $97 million or $1.05 per share in the reported quarter compared with $36 million or 46 cents per share recorded in the prior-year quarter.

Revenues Improve, Expenses Decline

Total GAAP net revenues were $754 million, up 39.9% year over year. The top line beat the Zacks Consensus Estimate of $655.6 million. Adjusted net revenues were $650 million, up 24.3%.

Total non-interest expenses declined 32.8% year over year to $213 million. The decline was due to a fall in execution, clearing and distribution fees, customer bad debt, and general and administrative costs.

Income before income taxes was $541 million, increasing significantly from $222 million recorded in the prior-year quarter.

Adjusted pre-tax profit margin was 67%, up from 59% a year ago.

In the reported quarter, total customer DARTs increased 32% year over year to 2.30 million. Total cleared DARTs jumped from 1.56 million to 2.08 million.

Additionally, customer accounts grew 61.4% from the year-ago quarter to 1,414,000.

Capital Position Strong

As of Jun 30, 2021, cash and cash equivalents (including cash and securities set aside for regulatory purposes) totaled $41 billion compared with $48 billion as of Dec 31, 2020.

As of Jun 30, 2021, total assets were $104.3 billion compared with $95.7 billion as of Dec 31, 2020. Total equity was $9.9 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 $99 million in net interest income over the next four quarters and $102 million as the yearly run rate based on the current balance sheet.

On the flip side, a 25 bps unanticipated fall will likely result in a decline in net interest income of $32 million over the next four quarters and $32 million for the yearly run rate.

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month.

VGM Scores

At this time, Interactive Brokers Group, Inc. has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

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

Outlook

Interactive Brokers Group, Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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