LPL Earnings Do Not Live Up to Expectations

Banking, finance, and taxes

Published: February 12, 2016 11:45 am

Last Updated: January 13, 2020 1:15 pm

LPL Financial Holdings Inc. (NASDAQ: LPLA) reported its fourth-quarter financial results after the markets closed on Thursday. The company had $0.37 in earnings per share (EPS) on $1.02 billion in revenue, which compares to consensus estimates that called for $0.51 in EPS. In the same period of the previous year, it posted EPS of $0.66 and revenue of $1.10 billion.

In this quarter, brokerage and advisory assets were $476 billion, an increase of 3% sequentially. Also net new advisory assets were $3.1 billion, translating to a 7% annualized growth rate.

Transaction and fee revenues were $97 million, a decrease of 8% sequentially, primarily due to the timing of conferences, as well as slightly lower trading volumes.

On the books, cash and cash equivalents totaled $724.5 million, compared to $410.0 million in the previous quarter (September).

Mark Casady, chairman and CEO of LPL, commented on earnings:

The market environment was volatile and challenging in 2015, particularly for brokerage sales. So we focused on bringing assets onto our platform and executing on our operational, efficiency, and capital plans.

As we move into 2016, market volatility has only increased, and we expect continued pressure on brokerage sales. That being said, we believe our scale and stability give us an advantage in markets like this. We remain focused on growth, delivering on our expense and capital plans, and managing the DOL rule transition.

Chief Financial Officer Matt Audette added:

We also completed our debt transaction and the first $250 million of our $500 million share repurchase plan in the fourth quarter. In the first quarter of 2016 to date, we have repurchased another $25 million of our shares. Given the volatile start to the year, we will be flexible and dynamic going forward in our expense and capital plans.

Shares of LPL were trading down 34.6% to $16.53 on Friday, with a consensus analyst price target of $37.71 and a 52-week trading range of $15.66 to $48.18.

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