LPL Financial trades at $371.51 and has moved in lockstep with the market. Its shares have returned 12.6% over the last six months while the S&P 500 has gained 13.5%.
Is now a good time to buy LPLA? Find out in our full research report, it’s free.
Why Are We Positive on LPLA?
As the nation's largest independent broker-dealer with no proprietary products of its own, LPL Financial (NASDAQ: LPLA) provides technology, compliance, and business support services to independent financial advisors and institutions who manage investments for retail clients.
1. Skyrocketing Revenue Shows Strong Momentum
A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years.
Over the last five years, LPL Financial grew its revenue at an exceptional 24.2% compounded annual growth rate. Its growth surpassed the average financials company and shows its offerings resonate with customers.
2. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
LPL Financial’s EPS grew at 27.1% compounded annual growth rate over the last five years, higher than its 24.2% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
3. Stellar ROE Showcases Lucrative Growth Opportunities
Return on equity (ROE) reveals the profit generated per dollar of shareholder equity, which represents a key source of financial firm funding. Financial firms maintaining elevated ROE levels tend to accelerate wealth creation for shareholders via earnings retention, buybacks, and distributions.
Over the last five years, LPL Financial has averaged an ROE of 37.1%, exceptional for a company operating in a sector where the average shakes out around 10% and those putting up 25%+ are greatly admired. This shows LPL Financial has a strong competitive moat.
Final Judgment
These are just a few reasons why we think LPL Financial is an elite financials company. At $371.51 per share (or 13.7× forward P/E), is now the right time to buy the stock? See for yourself in our comprehensive research report, it’s free.
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