Why Interactive Brokers Group (IBKR) Stock Hit a Three-Month High Today

NEW YORK (TheStreet) -- Interactive Brokers Group (IBKR) surged to a three-month high on Wednesday, one day after the online discount brokerage firm beat analysts' expectations for its first-quarter report.

The company reported earnings of 34 cents a share, which surpassed the consensus estimate of 29 cents a share. Revenue soared 61.2% year over year to $369.2 million. Analysts surveyed by Thomson Reuters expected revenue of $314.8 million.

Interactive Brokers also announced a quarterly dividend of 10 cents a share payable on June 13 to all shareholders of record as of May 30.

The stock hit a high of $24.44 for the day as of 2:15 p.m. More than 1.4 million shares had changed hands, more than double the average volume of 538,021.

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Separately, TheStreet Ratings team rates INTERACTIVE BROKERS GROUP as a "hold" with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate INTERACTIVE BROKERS GROUP (IBKR) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, IBKR's share price has jumped by 45.28%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 5.5%. Since the same quarter one year prior, revenues slightly increased by 1.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The gross profit margin for INTERACTIVE BROKERS GROUP is rather high; currently it is at 52.92%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 1.37% trails the industry average.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Diversified Financial Services industry and the overall market, INTERACTIVE BROKERS GROUP's return on equity is below that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$51.25 million or 114.78% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • You can view the full analysis from the report here: IBKR Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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