Interactive Brokers Group, Inc.(NASDAQ: IBKR) in the fourth quarter 2016 ended 31st December has reported the adjusted earnings per share growth of $0.07, missing the analysts’ estimates for the adjusted earnings per share of $0.33. The company had reported the adjusted revenue growth of $193 million in the fourth quarter 2016, missing the analysts’ estimates for revenue of $365.05 million. As a result, the stock opened subdued today and fell over 3.2% (as of 9:45 AM EST on January 18th, 2017; Source: Google finance).
For the FY 16, Interactive Brokers has reported the diluted earnings per share of $1.25 for the year ended December 31, 2016, compared to diluted earnings per share of $0.78 for 2015, excluding other comprehensive income. Moreover, IBKR has reported the net revenues of $1,396 million and income before income taxes of $761 million for 2016, compared to net revenues of $1,189 million and income before income taxes of $458 million in FY 15.
Additionally, there is a strong growth in net interest income, which has increased 24% from 2015, and the non-recurrence of unsecured customer losses caused by the sudden move in the value of the Swiss franc in January 2015. The trading gains fall 39% in 2016 on the lower market making trading volumes and decreases in volatility and in the actual-to-implied volatility ratio compared to 2015.
In 2016, Interactive Brokers had a currency diversification strategy in which IBKR to base the net worth in GLOBALs, which is a basket of 15 major currencies in which the company holds the equity. Due to this strategy the comprehensive earnings by $65 million, as the U.S. dollar value of the GLOBAL decreased by approximately 0.93%. Interactive Brokers had a $26 million net mark-to-market gain on the U.S. government securities portfolio compared to a $33 million net mark-to-market loss in 2015.
Interactive Brokers has declared a quarterly cash dividend of $0.10 per share, which is payable on March 14th, 2017 to shareholders of record as of March 1st, 2017.
Interactive Brokers is upgraded by Goldman to “Neutral” on January 10th, 2017. Keefe Bruyette has initiated Interactive Brokers Group on December 8th, 2016 to “Outperform”, and has kept the price target of the shares are set at $44. On the other hand, an analyst from SunTrust downgraded their price target on the stock to $38.00 against $41.00 despite maintaining their “Hold” recommendation. SunTrust analyst, Robinson Humphrey says that even though the stock has a potential in the long term, the ongoing “the sluggish trading activity and diminishing benefits from further rate increases” would lead to a lower EPS estimates in the next two years.
IBKR stock has risen 11.5% in a year (source: Google Finance)