Interactive Brokers Group, Inc .'s ( IBKR ) first-quarter
2013 earnings of 14 cents per share missed the Zacks Consensus
Estimate by 2 cents. This also compares unfavorably with the
year-ago quarter's earnings of 27 cents.TD AMERITRADE (AMTD): Free Stock Analysis
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The quarterly results lagged marginally owing to a drop in
Interactive's top line, partially offset by a decline in operating
expenses. Further, though there has been an improvement in the
performance of Electronic Brokerage segment, Market Making
segment's performance continues to drag down the overall
Net income available to common shareholders was $6.6 million in
the first quarter, plummeting 40.5% from $11.1 million in the
Performance in Detail
Interactive's total net revenue in the first quarter stood at
$216.1 million, declining 28.9% year over year. Moreover, net
revenue was 15.6% lower than the Zacks Consensus Estimate of $256.0
The dip was primarily attributable to a significant fall in
trading gains. However, this was partially mitigated by increases
in other income, commission and execution fees and rise in interest
income as well as lower interest expenses.
Interactive's net income before taxes in the reported quarter fell
45.1% year over year to $82.2 million. Similarly, pre-tax profit
margin fell from 49% in the prior-year quarter to 38% in the
Total non-interest expenses were $133.9 million, down 13.2% from
$154.2 million in the prior-year quarter. The decline was mainly
due to lower execution and clearing expenses, employee compensation
and benefits expenditure along with communications costs. However,
these were partially offset by higher occupation, depreciation and
amortization costs and general and administrative expenses.
Market Making: Net revenue plunged 83.4% from the prior-year
quarter to $23.6 million. Pre-tax loss was $29 million for the
reported quarter compared with pre-tax income of $66 million in the
Electronic Brokerage: Net revenue improved 23.0% year over year to
$195.3 million. Likewise, pre-tax income stood at $111.0 million,
increasing 33.1% from the year-ago quarter. Moreover, pre-tax
profit margin was 57%, up from 52% in the prior-year quarter.
Additionally, total daily average revenue trades (DARTs) for
cleared-only customers increased 8.0% year over year to
As of Mar 31, 2013, cash and cash equivalents (including cash and
securities segregated for regulatory purposes) were $13.7 billion,
down 2.9% from $14.1 billion as of Dec 31, 2012. Total assets were
$35.1 billion, up 5.9% from $33.2 billion as of Dec 31, 2012.
Total equity came in at $4.82 billion as against total equity of
$4.81 billion as of Dec 31, 2012.
Concurrent with the earnings release, Interactive declared a
quarterly cash dividend of 10 cents per share. The dividend will be
paid on Jun 14, to shareholders of record as of May 31.
Performance of Other Investment Brokers
Charles Schwab Corporation 's ( SCHW ) earnings per
share marginally missed the Zacks Consensus Estimate.
Lower-than-expected results were attributable to higher operating
expenses and a rise in provision for loan losses, partially offset
by growth in the top line.
TD Ameritrade Holding Corporation 's ( AMTD ) fiscal
second-quarter 2013 earnings marginally beat the Zacks Consensus
Estimate. Better-than-expected results for the quarter reflected a
rise in revenues and a decline in operating expenses.
In spite of lower-than-expected results, Interactive's robust
fundamentals and liquid balance sheet are expected to boost
investors' confidence in the stock. Further, the company's strong
market position and technological excellence are anticipated to act
as tailwinds going forward.
Further, Interactive's Market Making segment funds its dividend
payments. However, this segment is underperforming of late, which
has made the company cautious about its ability to consistently
generate sufficient returns to fund dividend payment.
Interactive currently holds a Zacks Rank #3 (Hold). Among other
major investment brokers, E*TRADE Financial
Corporation ( ETFC ) is scheduled to
report results on Apr 18.