5 reasons to invest in Interactive Brokers (IBKR) stocks now
Interactive brokers IBKR stock seems like a good investment option right now. Despite cost concerns and falling interest rates, the company remains well positioned for growth, supported by its technological excellence and strategy for global expansion. These should support the growth in turnover.
Additionally, analysts are bullish on IBKR’s earnings growth outlook. Over the past 60 days, Zacks’ consensus estimate for current year earnings has risen 2.7%. Thus, the company currently holds a Zacks Rank # 2 (Buy).
In view of the evolution of its prices, IBKR shares have gained 35.5% over the past year, against 39.7% of growth recorded by the industry.
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Below are a few other factors that make IBKR stock a promising choice:
Profit growth: Interactive Brokers has experienced 22.1% profit growth over the past three to five years, above the industry average of 18.6%. The uptrend should continue in the short term. In 2021 and 2022, the company’s profits are expected to increase by 35.7% and 1.5% respectively.
Plus, its projected long-term (three to five year) earnings growth rate of 23.4% promises rewards for investors.
Income Force: Driven by increased interest income, commissions and the company’s restructuring efforts, its net income has seen a compound annual growth rate (CAGR) of 13.3% over the past six years (2015 -2020). The uptrend has continued in the first nine months of 2021. Given the steady improvement in Average Daily Income (DART) transactions, IBKR is expected to continue to see higher revenue. For 2021, revenues are expected to increase by 19%.
Strong leverage: Interactive Brokers does not use debt to finance its operations. Its debt-to-equity ratio is zero compared to the industry average of 0.25. This shows that IBKR is better positioned than its peers. The business will be financially stable even under adverse economic conditions.
Technological advance: IBKR handles transactions in stocks, futures, options and currencies on more than 135 exchanges in multiple countries and currencies. Unlike many of its peers, it has a very low level of compensation expense relative to net income, primarily due to its technological excellence.
Additionally, the launch of IBKR Lite has enabled investors to trade commission-free and is therefore expected to lead to an increase in the company’s market share. The launch of Impact Dashboard (an innovative sustainable investment tool) made IBKR the first major brokerage firm to make it easy for investors to align their portfolios with their values. The company also started cryptocurrency trading through Paxos Trust Company, charging lower commissions than other crypto exchanges.
Global expansion strategy: Interactive Brokers explores opportunities in the emerging markets of Taiwan, Mexico and India. Diversification helps him to know the stability of income. With central clearing houses as counterparties, exclusive trading in listed instruments and continuous monitoring of client positions, IBKR was able to limit its credit risk to a large extent.
Other actions to consider
Some other top ranked stocks from the same space are Morgan stanley MRS, Cowen Group, Inc. CITY and Moélis & Company MC. Morgan Stanley, Cowen Group and Moelis & Company currently have a Zacks rank of 2. You can see The full list of Zacks # 1 Rank (Strong Buy) stocks today here.
Zacks’ consensus estimate for Morgan Stanley’s earnings for the current year has remained unchanged for the past 60 days. MS shares have risen 47.3% in the past year.
COWN’s earnings estimates have risen 5.6% for 2021 over the past 60 days. Over the past year, Cowen Group shares have risen 41.4%.
Moelis & Company has recorded a marginal upward revision of the profit estimate for 2021 in the last 60 days. The stock has climbed 35.7% in the past year.
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