Financial stock Interactive Brokers soared out of a base Wednesday, hitting a buy point and all-time high after a strong earnings report. It gave back some gains Thursday. This brokerage leader is today's IBD 50 Stocks To Watch pick.
Interactive Brokers holds the top spot out of 32 stocks in the Finance-Investment Bank/Brokers industry group. The group is ranked 26th out of the 197 IBD industry groups, and has held a top 40 spot for the last three months. The CAN SLIM investing strategy looks to the top 40 industries to find leading growth stocks.
Connecticut-based Interactive is a leading global online brokerage, serving institutional and individual clients in over 200 countries and territories. It operates through American, European and Asia-Pacific exchanges.
This deep-discount broker provides broad market coverage in stocks, options, futures, currencies, bonds, mutual funds and cryptocurrencies. Its IBKR Lite product offers zero commissions on U.S.-listed stocks and ETFs, and clients can fund accounts in 26 currencies. It executes nearly 1.9 million trades per day on average, while offering lower margin rates than most competitors.
Financial Stock Hits Buy Point Of A Base
IBKR shares took off after a strong Q3 earnings report on Oct. 18, and formed the beginning of a double-bottom base in November.
It reported better-than-expected Q4 earnings after Tuesday's close, setting off a Wednesday rally that hit an all-time high of 83.40 before pulling back. The stock closed above the 80.95 buy point, booking a 4.8% gain in its heaviest volume since September.
Financial stocks pulled back Thursday on overall market weakness and a disappointing Q4 report from peer Charles Schwab.
IBKR stock traded about 1% below the buy point midday Thursday. Shares are up over 9% in January, in line with the 8.8% gain for the industry group.
Earnings Growth Picking Up Steam
Q4 earnings of $1.30 per share marked an increase compared to $1.08 and 84 cents in the prior two quarters.
Net interest income rose 92% to $565 million versus $540 million expected. The uptick stemmed from higher interest rates and customer balances, despite a decline in margin lending balances.
Analysts project $5.61 annual EPS in 2023, up from $4.05 in 2022, and $5.74 in 2024.
Customer accounts increased 25% year over year to 2.09 million, while margin loans decreased 29% to $38.9 billion. Customer equity fell 18% to $306.7 billion.
Mutual funds own 43% of shares, with 510 owning the financial stock in December, up from 470 in September. Rising institutional ownership can be a positive sign for stock performance.
Award Winning and ESG Focused
Interactive earned the top spot in Barron's Best Online Brokers 2022.
It shifted focus in the last two years to include more ESG investing options. Their ESG products include the IMPACT app, Impact Dashboard and ESG Scores.
The IMPACT app was rated first in the January 2023 top 8 ESG apps by businessinsider.com. Customers can customize and track company criteria, including scores for ESG, racial equality and animal testing.
Interactive has also committed to reducing its carbon footprint with initiatives that include renewable energy in 18 offices and data centers.
Follow Kimberley Koenig for more stock news on Twitter @IBD_KKoenig.
