LPL Financial Beats on Earnings & Revs

Zacks

LPL Financial Holdings Inc.’s (LPLA) third-quarter 2013 adjusted earnings per share came in at 56 cents, surpassing the Zacks Consensus Estimate of 52 cents. Further, this was up 19.1% from 47 cents earned in the year-ago quarter.

Better-than-expected results were attributable to a rise in revenues, partly offset by higher operating expenses. Further, significant growth in assets under custody was a tailwind.

After considering certain non-recurring items, net income attributable to LPL Financial came in at $37.6 million or 36 cents per share, up from $34.3 million or 31 cents per share in the year-ago quarter.

Quarter in Detail

Net revenue came in at $1.1 billion, up 16.1% from the prior-year quarter. Top-line growth was primarily driven by a rise in advisory and commission revenues. Moreover, total revenue beat the Zacks Consensus Estimate of $1.02 billion.

Total expenses came in at $978.5 million, up 16.5% on a year-over-year basis. The increase was mainly due to rise in all the components of operating expense.

Non-operating expense, net of non-controlling interests, was recorded at $13.4 million up 4.2% from prior-year quarter.

Advisory assets under custody totaled $141.1 billion as of Sep 30, 2013, up 19.0% from the year-ago period.

Share Repurchase

LPL Financial repurchased about 3.3 million shares for $126.5 million in the reported quarter.

Performance of Other Investment Brokers

Among other investment management firms, E*TRADE Financial Corporation (ETFC) and Interactive Brokers Group, Inc.’s (IBKR) earnings came in line with the Zacks Consensus Estimate. However, The Charles Schwab Corporation’s (SCHW) earnings beat the Zacks Consensus Estimate.

Our Viewpoint

LPL Financial’s sound capital deployment activities continue to boost shareholders’ confidence. Moreover improved advisory activity will benefit the company in the long run. However, rising expenses and a sluggish economic scenario remain causes of concern.

LPL Financial currently carries a Zacks Rank #4 (Sell).

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