NEW YORK ( TheStreet) -- Interactive Brokers Group (Nasdaq: IBKR) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
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- The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Diversified Financial Services industry average. The net income increased by 29.0% when compared to the same quarter one year prior, rising from $7.98 million to $10.30 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 14.0%. Since the same quarter one year prior, revenues slightly increased by 7.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The gross profit margin for INTERACTIVE BROKERS GROUP is rather high; currently it is at 55.63%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, IBKR's net profit margin of 3.46% significantly trails the industry average.
- The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- INTERACTIVE BROKERS GROUP has improved earnings per share by 23.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, INTERACTIVE BROKERS GROUP reported lower earnings of $0.89 versus $1.37 in the prior year. For the next year, the market is expecting a contraction of 10.7% in earnings ($0.80 versus $0.89).