LPL Financial Holdings (NasdaqGS:LPLA) - Share price, News & Analysis

Q: What is the Fair Price of LPLA when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

LPLA ($192.2) is trading below our estimate of [[fair value]] ($280.5)

LPLA fundamental analysis
Snowflake Score
Valuation	3/6
Future Growth	5/6
Past Performance	2/6
Financial Health	3/6
Dividends	0/6

LPLA Stock Overview

Rewards

Trading at 31.5% below our estimate of its fair value

Earnings are forecast to grow 40.97% per year

Earnings have grown 13.7% per year over the past 5 years

Risk Analysis

Debt is not well covered by operating cash flow

LPL Financial Holdings Competitors

Raymond James Financial

NYSE:RJF

US$20.1b

Interactive Brokers Group

NasdaqGS:IBKR

US$24.4b

NasdaqGS:XP

US$11.1b

Stifel Financial

NYSE:SF

US$6.3b

Price History & Performance

Summary of all time highs, changes and price drops for LPL Financial Holdings
Historical stock prices
Current Share Price	US$191.44
52 Week High	US$220.80
52 Week Low	US$127.03
Beta	0.95
1 Month Change	-4.65%
3 Month Change	3.09%
1 Year Change	41.24%
3 Year Change	134.98%
5 Year Change	346.14%
Change since IPO	495.46%

Recent News & Updates

May 15

LPL Financial: Compounding Through The Cycles

LPL Financial recently posted a solid quarter overall, helped by re-accelerating momentum in its net new assets. The deal pipeline remains robust and should support growth for many years to come. LPL is also poised to benefit from rate hikes in the coming months. The current valuation seems undemanding relative to LPL's potential earnings power.

Shareholder Returns

	LPLA	US Capital Markets	US Market
7D	-0.1%	6.3%	6.3%
1Y	41.2%	-18.3%	-18.8%

Return vs Industry: LPLA exceeded the US Capital Markets industry which returned -18% over the past year.

Return vs Market: LPLA exceeded the US Market which returned -18.4% over the past year.

Price Volatility

Is LPLA's price volatile compared to industry and market?
LPLA volatility
LPLA Average Weekly Movement	6.6%
Capital Markets Industry Average Movement	0.5%
Market Average Movement	8.1%
10% most volatile stocks in US Market	16.7%
10% least volatile stocks in US Market	3.2%

Stable Share Price: LPLA is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 7% a week.

Volatility Over Time: LPLA's weekly volatility (7%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1989	6,051	Dan Arnold	https://www.lpl.com

LPL Financial Holdings Inc., together with its subsidiaries, provides an integrated platform of brokerage and investment advisory services to independent financial advisors and financial advisors at financial institutions in the United States. Its brokerage offerings include variable and fixed annuities, mutual funds, equities, retirement and education savings plans, fixed income, and insurance, as well as alternative investments, such as non-traded real estate investment trusts and auction rate notes. The company also provides advisory platforms that provide access to mutual funds, exchange-traded funds, stocks, bonds, certain option strategies, unit investment trusts, and institutional money managers and no-load multi-manager variable annuities.

LPL Financial Holdings Fundamentals Summary

How do LPL Financial Holdings's earnings and revenue compare to its market cap?
LPLA fundamental statistics
Market Cap	US$15.37b
Earnings (TTM)	US$463.99m
Revenue (TTM)	US$8.08b

33.0x

P/E Ratio

1.9x

P/S Ratio

Is LPLA overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
LPLA income statement (TTM)
Revenue	US$8.08b
Cost of Revenue	US$6.27b
Gross Profit	US$1.81b
Other Expenses	US$1.35b
Earnings	US$463.99m

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	5.80
Gross Margin	22.39%
Net Profit Margin	5.74%
Debt/Equity Ratio	156.9%

How did LPLA perform over the long term?

See historical performance and comparison

Dividends

0.5%

Current Dividend Yield

17%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is LPLA undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

3/6

Valuation Score 3/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for LPLA?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for LPLA. This is calculated by dividing LPLA's market cap by their current preferred multiple.
What is LPLA's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$15.37b

LPLA key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	2.1x
Enterprise Value/EBITDA	16.8x
PEG Ratio	1.7x

Price to Earnings Ratio vs Peers

How does LPLA's PE Ratio compare to its peers?

LPLA PE Ratio vs Peers

The above table shows the PE ratio for LPLA vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	14.4x
RJF Raymond James Financial	13.3x	9.2%	US$20.1b
IBKR Interactive Brokers Group	20.8x	26.1%	US$24.4b
XP XP	15.6x	15.8%	US$11.1b
SF Stifel Financial	8x	2.4%	US$6.3b
LPLA LPL Financial Holdings	33.1x	41.0%	US$15.4b

Forward PE

Price-To-Earnings vs Peers: LPLA is expensive based on its Price-To-Earnings Ratio (33.1x) compared to the peer average (14.4x).

Price to Earnings Ratio vs Industry

How does LPLA's PE Ratio compare vs other companies in the US Capital Markets Industry?

Price-To-Earnings vs Industry: LPLA is expensive based on its Price-To-Earnings Ratio (33.1x) compared to the US Capital Markets industry average (29.6x)

Price to Earnings Ratio vs Fair Ratio

What is LPLA's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

LPLA PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	33x
Fair PE Ratio	17.2x

Price-To-Earnings vs Fair Ratio: LPLA is expensive based on its Price-To-Earnings Ratio (33.1x) compared to the estimated Fair Price-To-Earnings Ratio (24.5x).

Share Price vs Fair Value

What is the Fair Price of LPLA when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: LPLA ($192.2) is trading below our estimate of fair value ($280.5)

Significantly Below Fair Value: LPLA is trading below fair value by more than 20%.

Price to Earnings Growth Ratio

PEG Ratio: LPLA is good value based on its PEG Ratio (0.8x)

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Future Growth

How is LPL Financial Holdings forecast to perform in the next 1 to 3 years based on estimates from 7 analysts?

Future Growth Score

5/6

Future Growth Score 5/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

19.1%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: LPLA's forecast earnings growth (41% per year) is above the savings rate (1.9%).

Earnings vs Market: LPLA's earnings (41% per year) are forecast to grow faster than the US market (13.9% per year).

High Growth Earnings: LPLA's earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: LPLA's revenue (12.6% per year) is forecast to grow faster than the US market (8.4% per year).

High Growth Revenue: LPLA's revenue (12.6% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: LPLA's Return on Equity is forecast to be very high in 3 years time (54.8%).

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Past Performance

How has LPL Financial Holdings performed over the past 5 years?

Past Performance Score

2/6

Past Performance Score 2/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

13.7%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: LPLA has high quality earnings.

Growing Profit Margin: LPLA's current net profit margins (5.7%) are lower than last year (7.3%).

Past Earnings Growth Analysis

Earnings Trend: LPLA's earnings have grown by 13.7% per year over the past 5 years.

Accelerating Growth: LPLA's earnings growth over the past year (3.9%) is below its 5-year average (13.7% per year).

Earnings vs Industry: LPLA earnings growth over the past year (3.9%) underperformed the Capital Markets industry 80.5%.

Return on Equity

High ROE: Whilst LPLA's Return on Equity (26.74%) is high, this metric is skewed due to their high level of debt.

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Financial Health

How is LPL Financial Holdings's financial position?

Financial Health Score

3/6

Financial Health Score 3/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: LPLA's short term assets ($4.3B) exceed its short term liabilities ($691.5M).

Long Term Liabilities: LPLA's short term assets ($4.3B) do not cover its long term liabilities ($5.3B).

Debt to Equity History and Analysis

Debt Level: LPLA's net debt to equity ratio (97.6%) is considered high.

Reducing Debt: LPLA's debt to equity ratio has reduced from 250.7% to 156.9% over the past 5 years.

Debt Coverage: LPLA's debt is not well covered by operating cash flow (11.7%).

Interest Coverage: LPLA's interest payments on its debt are well covered by EBIT (7.4x coverage).

Balance Sheet

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Dividend

What is LPL Financial Holdings's current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

0.52%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: LPLA's dividend (0.52%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.57%).

High Dividend: LPLA's dividend (0.52%) is low compared to the top 25% of dividend payers in the US market (4.23%).

Stability and Growth of Payments

Stable Dividend: LPLA is not paying a notable dividend for the US market, therefore no need to check if payments are stable.

Growing Dividend: LPLA is not paying a notable dividend for the US market, therefore no need to check if payments are increasing.

Earnings Payout to Shareholders

Earnings Coverage: LPLA is not paying a notable dividend for the US market.

Cash Payout to Shareholders

Cash Flow Coverage: LPLA is not paying a notable dividend for the US market.

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Management

How experienced are the management team and are they aligned to shareholders interests?

3.9yrs

Average management tenure

CEO

Dan Arnold (57 yo)

7.25yrs

Tenure

US$12,875,868

Compensation

Mr. Dan Hogan Arnold, Jr., B.S., C.P.A. & M.B.A. has been Chief Executive Officer of LPL Financial Holdings Inc and LPL Financial LLC since January 3, 2017 and its President since March 13, 2015. In this r...

CEO Compensation Analysis

Compensation vs Market: Dan's total compensation ($USD12.88M) is about average for companies of similar size in the US market ($USD13.43M).

Compensation vs Earnings: Dan's compensation has increased by more than 20% in the past year.

Leadership Team

Experienced Management: LPLA's management team is considered experienced (3.9 years average tenure).

Board Members

Experienced Board: LPLA's board of directors are considered experienced (5.4 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/06/28 00:00
End of Day Share Price	2022/06/28 00:00
Earnings	2022/03/31
Annual Earnings	2021/12/31