LPL Earnings Do Not Live Up to Expectations

By Chris Lange Updated Jan 13, 1:15PM EST · Published Feb 12, 11:45AM EST

LPL Earnings Do Not Live Up to Expectations — © Thinkstock

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).
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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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Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics. Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications. A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.