NasdaqGS:LPLA

Stock Analysis Report

Executive Summary

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.

Rewards

Trading at 32.7% below its fair value

Earnings grew by 44.4% over the past year

Risk Analysis

No risks detected for LPLA from our risk checks.


Snowflake Analysis

Solid track record and good value.


Similar Companies

Share Price & News

How has LPL Financial Holdings's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: LPLA has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-0.1%

LPLA

0.8%

US Capital Markets

0.03%

US Market


1 Year Return

53.4%

LPLA

20.1%

US Capital Markets

18.6%

US Market

Return vs Industry: LPLA exceeded the US Capital Markets industry which returned 20.1% over the past year.

Return vs Market: LPLA exceeded the US Market which returned 18.6% over the past year.


Shareholder returns

LPLAIndustryMarket
7 Day-0.1%0.8%0.03%
30 Day6.1%4.8%1.7%
90 Day15.9%7.7%5.7%
1 Year55.3%53.4%22.4%20.1%21.1%18.6%
3 Year170.6%157.3%39.5%31.6%45.6%36.2%
5 Year147.0%120.7%84.0%66.9%71.1%52.3%

Price Volatility Vs. Market

How volatile is LPL Financial Holdings's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is LPL Financial Holdings undervalued compared to its fair value and its price relative to the market?

32.7%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: LPLA ($92.26) is trading below our estimate of fair value ($137.02)

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


Price To Earnings Ratio

PE vs Industry: LPLA is good value based on its PE Ratio (14x) compared to the Capital Markets industry average (33.2x).

PE vs Market: LPLA is good value based on its PE Ratio (14x) compared to the US market (18.5x).


Price to Earnings Growth Ratio

PEG Ratio: LPLA is poor value based on its PEG Ratio (33.5x)


Price to Book Ratio

PB vs Industry: LPLA is overvalued based on its PB Ratio (7.4x) compared to the US Capital Markets industry average (6.3x).


Next Steps

Future Growth

How is LPL Financial Holdings forecast to perform in the next 1 to 3 years based on estimates from 9 analysts?

0.4%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: LPLA's forecast earnings growth (0.4% per year) is below the savings rate (1.7%).

Earnings vs Market: LPLA's earnings (0.4% per year) are forecast to grow slower than the US market (14.2% per year).

High Growth Earnings: LPLA's earnings are forecast to grow, but not significantly.

Revenue vs Market: LPLA's revenue (7% per year) is forecast to grow slower than the US market (7.4% per year).

High Growth Revenue: LPLA's revenue (7% 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 (61.4%).


Next Steps

Past Performance

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

27.2%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: LPLA has high quality earnings.

Growing Profit Margin: LPLA's current net profit margins (10.1%) are higher than last year (7.7%).


Past Earnings Growth Analysis

Earnings Trend: LPLA's earnings have grown significantly by 27.2% per year over the past 5 years.

Accelerating Growth: LPLA's earnings growth over the past year (44.4%) exceeds its 5-year average (27.2% per year).

Earnings vs Industry: LPLA earnings growth over the past year (44.4%) exceeded the Capital Markets industry 20.6%.


Return on Equity

High ROE: Whilst LPLA's Return on Equity (54.27%) is outstanding, this metric is skewed due to their high level of debt.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is LPL Financial Holdings's financial position? (This company is analysed differently as a bank or financial institution)


Financial Position Analysis


Debt to Equity History and Analysis


Balance Sheet

Inventory Level: LPLA has a low level of unsold assets or inventory.

Debt Coverage by Assets: LPLA's debt is covered by short term assets (assets are 1.2x debt).


Financial Institutions Analysis

Asset Level: LPLA's level of assets compared to its equity is low.

Allowance for Bad Loans: Insufficient data to determine if LPLA has a sufficient allowance for bad loans.

Low Risk Liabilities: LPLA reports no customer deposits, loans are made up entirely of externally borrowed funds.

Loan Level: Insufficient data to determine if LPLA has an acceptable proportion of non-loan assets held.

Low Risk Deposits: LPLA has advanced significantly more loans than the customer deposits it holds.

Level of Bad Loans: Insufficient data to determine if LPLA has an appropriate level of bad loans.


Next Steps

Dividend

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

1.08%

Current Dividend Yield


Dividend Yield vs Market

company1.1%marketbottom25%1.4%markettop25%3.7%industryaverage1.9%forecastin3Years1.2%

Current dividend yield vs market & industry

Notable Dividend: LPLA's dividend (1.08%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.42%).

High Dividend: LPLA's dividend (1.08%) is low compared to the top 25% of dividend payers in the US market (3.7%).


Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, LPLA has been paying a dividend for less than 10 years.

Growing Dividend: LPLA's dividend payments have increased, but the company has only paid a dividend for 8 years.


Current Payout to Shareholders

Dividend Coverage: With its low payout ratio (15.2%), LPLA's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: LPLA's dividends in 3 years are forecast to be thoroughly covered by earnings (13.7% payout ratio).


Next Steps

Management

What is the CEO of LPL Financial Holdings's salary, the management and board of directors tenure and is there insider trading?

3.9yrs

Average management tenure


CEO

Dan Arnold (55yo)

2.9yrs

Tenure

US$7,128,351

Compensation

Mr. Dan Hogan Arnold serves as President and Chief Executive Officer of LPL Financial Holdings Inc. (“LPL”) (NASDAQ: LPLA). In this role, He sets the strategy and direction for the LPL with the board, whil ...


CEO Compensation Analysis

Compensation vs Market: Dan's total compensation ($USD7.13M) is about average for companies of similar size in the US market ($USD6.81M).

Compensation vs Earnings: Dan's compensation has been consistent with company performance over the past year.


Management Age and Tenure

3.9yrs

Average Tenure

55yo

Average Age

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


Board Age and Tenure

2.9yrs

Average Tenure

65yo

Average Age

Experienced Board: LPLA's board of directors are not considered experienced ( 2.9 years average tenure), which suggests a new board.


Insider Trading

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


Recent Insider Transactions

SellUS$42,12510 May 19
Tracy Calder
EntityIndividual
Role
Senior Key Executive
MD & Chief Risk Officer
Shares500
Max PriceUS$84.25
SellUS$831,17327 Feb 19
Tracy Calder
EntityIndividual
Role
Senior Key Executive
MD & Chief Risk Officer
Shares10,747
Max PriceUS$77.34

Ownership Breakdown

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


Management Team

  • Dan Arnold (55yo)

    President

    • Tenure: 2.9yrs
    • Compensation: US$7.13m
  • Matt Audette (44yo)

    Chief Financial Officer

    • Tenure: 4.3yrs
    • Compensation: US$3.32m
  • Sallie Larsen (65yo)

    MD & Chief Human Capital Officer

    • Tenure: 7.9yrs
    • Compensation: US$1.11m
  • Burt White (49yo)

    MD of Investor & Investment Solutions and Chief Investment Officer

    • Tenure: 12.9yrs
    • Compensation: US$2.16m
  • Andy Kalbaugh (55yo)

    MD and Divisional President of National Sales & Consulting

    • Tenure: 3.9yrs
  • Michelle Oroschakoff (57yo)

    MD & Chief Legal Officer

    • Tenure: 2.5yrs
    • Compensation: US$1.84m
  • Chris Koegel

    Senior Vice President of Investor Relations

    • Tenure: 4.9yrs
  • Tracy Calder (59yo)

    MD & Chief Risk Officer

    • Tenure: 3.9yrs
    • Compensation: US$2.41m
  • Scott Seese (49yo)

    MD & Chief Information Officer

    • Tenure: 2.4yrs
    • Compensation: US$2.90m
  • Rich Steinmeier (45yo)

    MD & Divisional President of Business Development

    • Tenure: 1.3yrs
    • Compensation: US$3.04m

Board Members

  • Rick Schifter (66yo)

    Independent Director

    • Tenure: 14.2yrs
    • Compensation: US$278.97k
  • James Riepe (75yo)

    Independent Director

    • Tenure: 11.8yrs
    • Compensation: US$305.64k
  • Bill Glavin (60yo)

    Independent Director

    • Tenure: 2.6yrs
    • Compensation: US$283.97k
  • Anne Mulcahy (67yo)

    Independent Director

    • Tenure: 6.6yrs
    • Compensation: US$288.57k
  • Dan Arnold (55yo)

    President

    • Tenure: 2.9yrs
    • Compensation: US$7.13m
  • H. Eberhart (65yo)

    Independent Director

    • Tenure: 5.1yrs
    • Compensation: US$281.07k
  • Jim Putnam (65yo)

    Non-Executive Chairman of the Board

    • Tenure: 2.8yrs
    • Compensation: US$388.57k
  • Corey Thomas (43yo)

    Independent Director

    • Tenure: 0.6yrs
  • Allison Mnookin (49yo)

    Independent Director

    • Tenure: 1.5yrs
    • Compensation: US$229.33k

Company Information

LPL Financial Holdings Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: LPL Financial Holdings Inc.
  • Ticker: LPLA
  • Exchange: NasdaqGS
  • Founded: 1989
  • Industry: Investment Banking and Brokerage
  • Sector: Diversified Financials
  • Market Cap: US$7.312b
  • Shares outstanding: 80.82m
  • Website: https://www.lpl.com

Number of Employees


Location

  • LPL Financial Holdings Inc.
  • 75 State Street
  • 22nd Floor
  • Boston
  • Massachusetts
  • 2109
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
LPLANasdaqGS (Nasdaq Global Select)YesCommon StockUSUSDNov 2010
7LIDB (Deutsche Boerse AG)YesCommon StockDEEURNov 2010

Biography

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 financ ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/12/08 00:09
End of Day Share Price2019/12/06 00:00
Earnings2019/09/30
Annual Earnings2018/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.