Interactive Brokers Capitalizes on Technology - Analyst Blog

We issued an updated research report on Interactive Brokers Group, Inc. IBKR on May 27, 2014. The company reported better-than-expected first-quarter results driven by an impressive performance across both the Electronic Brokerage and Market Making segments.

Interactive Brokers came out with its first-quarter 2014 results on Apr 15. Adjusted earnings not only surpassed the Zacks Consensus Estimate by 17.2% but also increased significantly on a year-over-year basis. Despite the overall subdued market scenario, the volatility in the equity market prevalent during the quarter was advantageous to the Greenwich, CT-based broker.

Interactive Brokers' technological excellence positions it as one of the low cost providers of broker-dealer services, thereby giving it a competitive edge over others. Moreover, this technical superiority enables it to rapidly adjust its systems in order to comply with various trading restrictions imposed by the Securities and Exchange Commission. Further, the company has a very low level of compensation expense relative to the net revenues, also due to its technological preeminence.

Interactive Brokers' capital deployment activities seem impressive as well. Given its steady capital position, we believe the company will continue to return capital to shareholders in form of regular and special dividends in the quarters to follow.

Following the impressive first quarter results, the Zacks Consensus Estimate for 2014 increased 11.2% to $1.19 per share over the last 60 days. Further, for 2015, the Zacks Consensus Estimate climbed 2.5% to $1.24 per share over the same time period.

Currently, Interactive Brokers sports a Zacks Rank #1 (Strong Buy).

Stocks That Warrant a Look

Some other investment brokers worth considering include E*TRADE Financial Corporation ETFC, Investment Technology Group Inc. ITG and KCG Holdings, Inc. KCG. All these stocks have the same Zacks Rank as Interactive Brokers.