A strong performer from today's morning trading session is Interactive Brokers, whose shares rose 1.3% to $83.91 per share. For those of you thinking about investing in the stock, here is a brief value analysis of the stock using the company's basic fundamental ratios.
Interactive Brokers's Valuation Is in Line With Its Sector Averages:
Interactive Brokers Group, Inc. operates as an automated electronic broker worldwide. The company belongs to the Finance sector, which has an average price to earnings (P/E) ratio of 14.34 and an average price to book (P/B) ratio of 1.57. In contrast, Interactive Brokers has a trailing 12 month P/E ratio of 29.6 and a P/B ratio of 2.88.
When we divideInteractive Brokers's P/E ratio by its expected five-year EPS growth rate, we obtain a PEG ratio of 0.69, which indicates that the market is undervaluing the company's projected growth (a PEG ratio of 1 indicates a fairly valued company). Your analysis of the stock shouldn't end here. Rather, a good PEG ratio should alert you that it may be worthwhile to take a closer look at the stock.
Exceptional Profitability Overshadowed by Excessive Leverage:
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue (MM) | $2,580 | $2,479 | $2,938 | $4,085 |
| Interest Income (MM) | $1,083 | $872 | n/a | n/a |
| Operating Margins | 46.6% | 51.2% | 60.9% | 49.0% |
| Net Margins | 6.24% | 7.87% | 10.48% | 9.3% |
| Net Income (MM) | $161 | $195 | $308 | $380 |
| Depreciation & Amort. (MM) | -$52 | -$62 | -$74 | -$84 |
| Earnings Per Share | $2.1 | $2.42 | $3.24 | $2.837 |
| EPS Growth | n/a | 15.24% | 33.88% | -12.44% |
| Diluted Shares (MM) | 77 | 81 | 95 | 96 |
| Free Cash Flow (MM) | $2,592 | $8,018 | $5,819 | $3,899 |
| Capital Expenditures (MM) | -$74 | -$50 | -$77 | -$69 |
| Net Current Assets (MM) | $5,705 | $6,883 | $385 | -$915 |
| Current Ratio | 1.22 | 1.22 | 1.14 | 1.09 |
| Long Term Debt (MM) | $6,319 | $9,838 | $11,769 | $8,940 |
| LT Debt to Equity | 4.35 | 5.04 | 4.91 | 3.14 |
Interactive Brokers has growing revenues and a flat capital expenditure trend and strong margins with a stable trend. Additionally, the company's financial statements display positive EPS growth and consistent free cash flow. However, the firm has high levels of debt. Finally, we note that Interactive Brokers has just enough current assets to cover current liabilities.
