Can the Interactive Brokers Rally Continue After Reporting Record Account Growth in 2025?

If you are looking at Interactive Brokers Group and wondering whether now is the time to get in, you are definitely not alone. Investors have watched the stock put on quite a show lately, scoring a 4.8% gain in the last week and an impressive 5.0% over the past month. Zooming out paints an even bolder picture, with a 43.5% return year-to-date, a 93.5% jump in the last 12 months, and a staggering 460.4% surge over the past five years. Clearly, something is happening here, and the market's appetite reflects more than just day-to-day trading noise.

Some of this momentum has been fueled by broader developments in the brokerage industry, as more investors look for robust trading platforms and competitive fee structures. Interactive Brokers has found itself in a sweet spot, benefiting from market tailwinds and ongoing shifts in investor behavior. That said, the big question remains: after such strong performance, is the current price actually a deal?

When we look at the company’s valuation score, the answer seems less obvious. On a scale where higher numbers mean more signs of undervaluation, Interactive Brokers clocks in at a straightforward 0 out of 6. In other words, according to these classic checks, it does not appear undervalued.

So where does that leave us? Valuation is more art than science, and there are plenty of ways analysts try to put a price tag on a stock. Next, we will break down those traditional approaches. The best way to truly judge value might just surprise you at the end.

Interactive Brokers Group scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Interactive Brokers Group Excess Returns Analysis

The Excess Returns model evaluates a stock based on how much return the company can generate over and above its cost of equity, using its existing investments. In essence, it helps us judge whether the firm is putting shareholder money to work with consistently superior results. This is often a sign of a high-quality business with a sustainable edge.

For Interactive Brokers Group, key metrics stand out:

• Book Value: $10.93 per share
• Stable EPS: $1.44 per share (Source: Weighted future Return on Equity estimates from 4 analysts.)
• Cost of Equity: $0.82 per share
• Excess Return: $0.62 per share
• Average Return on Equity: 17.16%
• Stable Book Value: $8.37 per share (Source: Median Book Value from the past 5 years.)

By weighing these inputs, the Excess Returns approach produces an intrinsic value of $17.54 per share for Interactive Brokers Group. Compared to where the stock is trading currently, this implies the market price is about 273% above the model’s fair value. In short, the stock appears significantly overvalued by these standards.

Result: OVERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Interactive Brokers Group.

Our Excess Returns analysis suggests Interactive Brokers Group may be overvalued by 273.3%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Interactive Brokers Group Price vs Earnings

For profitable companies like Interactive Brokers Group, the price-to-earnings (PE) ratio is one of the most widely used and useful valuation metrics. It provides investors with a quick snapshot of how much they are paying for each dollar of the company’s earnings, helping to gauge whether the stock is expensive or cheap relative to its profit-generating power.

A company’s expected earnings growth and its risk profile are major drivers of what counts as a “normal” or “fair” PE ratio. Firms with faster earnings growth or lower fundamental risks typically command a higher PE. Those in slower-growing sectors or facing more uncertainty usually trade at lower multiples.

Right now, Interactive Brokers Group trades at a PE ratio of 34.8x. That is notably higher than both the Capital Markets industry average at 27.2x and the average among peers at 30.8x. On first glance, this suggests the market is attaching a premium to Interactive Brokers, perhaps due to strong recent growth or competitive advantages.

However, Simply Wall St’s proprietary "Fair Ratio" takes a deeper look by incorporating important factors like projected earnings growth, industry specifics, profit margins, company size, and risk. For Interactive Brokers Group, the Fair Ratio is 22.6x, which is significantly lower than both the current PE and those of its peers and industry.

Because the stock’s current PE ratio of 34.8x is much higher than its Fair Ratio of 22.6x, the analysis points to an overvaluation on a PE multiple basis, even after considering its growth and other fundamentals.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Interactive Brokers Group Narrative

Earlier, we alluded to a smarter way to judge whether a stock’s price makes sense. Let’s introduce you to Narratives. A Narrative is your investment story: the reasoning and outlook you bring to the numbers. It connects the company’s past performance and competitive edge with your expectations for future revenue, profit margins, and growth, then calculates a fair value based on those assumptions.

Narratives on Simply Wall St are easy to use and available for everyone within the Community page, empowering millions of investors to create, share, and compare their perspectives. By linking your story to a financial forecast and monitoring the gap between Fair Value and the current Price, Narratives make it easier to decide when to buy or sell. They update dynamically as new earnings or news hit the market.

For example, with Interactive Brokers Group, some investors are optimistic and build Narratives where long-term product innovation and global expansion justify a much higher fair value, even up to $288 per share. Others focus on risks like volatile trading volumes and tough competition, leading them to a more conservative view with values as low as $140. No matter your view, building your own Narrative turns valuation from a black box into a transparent, dynamic, and personalized investment tool.

Do you think there's more to the story for Interactive Brokers Group? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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