Yahoo Finance LPL Financial (LPLA) Beats Q3 Earnings, Revises Guidance
LPL Financial Holdings Inc. LPLA reported third-quarter 2016 earnings per share of 58 cents, which handily beat the Zacks Consensus Estimate of 38 cents. Further, it was 35% higher than the prior-year quarter figure. Results in the reported quarter included several non-recurring items.
Better-than-expected results were mainly driven by lower expenses. Further, asset growth supported the results. However, pressure on top line continued to be a headwind.
Net income came in at $52 million, up 27% year over year.
Fall in Expenses Offset Lower Revenues
Net revenue (on a GAAP basis) totaled $1.02 billion, down 4% on a year-over-year basis. However, it was relatively in line with the Zacks Consensus Estimate. Fall in commission income and advisory revenue were partly offset by higher asset-based revenues, transaction and fee revenues, and other revenues.
Operating expenses declined 5% year over year to $925.3 million.
Non-operating interest expense was $23.9 million, surging 77% from the prior-year quarter.
As of Sep 30, 2016, advisory and brokerage assets summed $502.4 billion, up 9% year-over-year.
Guidance Revised
Driven by consistent focus on efficiency and productivity, which help LPL Financial make progress on lowering expenses, management lowered its 2016 Core G&A expense outlook range to $700–$705 million from $705–$715 million. Notably, the company projects Core G&A cost to be in $710–$725 million range for 2017.
Further, management lowered 2016 target Credit Agreement Net Leverage ratio to 3.25–3.5 times, from 4 times.
Our Take
LPL Financial has been expanding its offerings to all affiliated advisors in order to focus on high net-worth markets. We believe that such initiatives will help the company gain greater market share. However, weak top-line growth remains a major near-term concern.
LPL FINL HLDGS Price, Consensus and EPS Surprise
LPL FINL HLDGS Price, Consensus and EPS Surprise | LPL FINL HLDGS Quote
At present, LPL Financial has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Performance of Other Investment Brokers
The Charles Schwab Corp.’s SCHW third-quarter 2016 earnings of 34 cents per share beat the Zacks Consensus Estimate by a penny. Revenue growth, primarily driven by increase in equity market volatility, lower level of fee waivers and stable provisions, acted as tailwinds. Further, there was a significant increase in total client assets and new brokerage accounts. However, higher expenses remained a concern.
E*TRADE Financial Corp.’s ETFC earnings for third-quarter 2016 came in at 51 cents per share, comfortably beating the Zacks Consensus Estimate of 38 cents. The bottom line also improved significantly year over year on an adjusted basis. Results were aided by higher revenues, reduced expenses and a benefit from provisions.
TD Ameritrade Holding Corporation AMTD reported its fiscal 2016 fourth-quarter (ending Sep 30) earnings of 35 cents per share, lagging the Zacks Consensus Estimate of 38 cents. Net revenue was down primarily due to a fall in commissions and transaction fees. Also, higher expenses and continued decline in net interest margin (NIM) added to the downside. Further, the company recorded a decline in average client trades per day while the total client asset balances witnessed improvement.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
E TRADE FINL CP (ETFC): Free Stock Analysis Report
SCHWAB(CHAS) (SCHW): Free Stock Analysis Report
TD AMERITRADE (AMTD): Free Stock Analysis Report
LPL FINL HLDGS (LPLA): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
