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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Lpl Financial Holdings Inc. (XNAS:LPLA) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
LPLA
Name:
LPL FINANCIAL HOLDINGS INC. (XNAS:LPLA)
Sector:
- 148662.00K
Industry:
Capital Markets
CEO:
Mr. Dan Arnold
Total Employees:
6,099
Our Technological Advancement Rating
Our Rating:
B
Technological advancement compared to industry is -10.90% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF LPL FINANCIAL HOLDINGS INC.(LPLA) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND CAPITAL MARKETS INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
219.25
One Month Price Target:
$220.4
Six Month Price Target :
$226.14
Likely Price in One Year's Time:
Ticker:
$233.03
Likely Trading Range Today Under (Normal Volatility)
$218.48
Price Upper limit ($) :
$220.78
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$205.74
This week:
$189.03
This month :
$158.81
Other Primary facts
Market Cap:
17.62B
Market Cap Classification:
Mid Cap
Number of Shares
IPO Date:
79.77M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
24.74%
-21.73%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$281.87
$252.54
$156.63
$185.96
Medium risk (<10%) entry points
Buy Call
Sell Call
$242.99
Buy Put:
Sell Put:
$236.73
$195.43
$201.77
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
LPLA
Sharpe Ratio:
5.35%
Comparison:
LPLA, is amongst the top 20% stocks with highest risk-adjusted returns
Sharpe ratio is 52.97% higher than the industry
& ratio is 134.52% higher than the market/S&P 500 average
Average Returns/Yield of
LPLA
Daily returns:
0.17%
Weekly returns:
0.87%
Monthly returns:
3.48%
Yearly returns:
25.05%
Comparison of returns:
Average annual returns/yield (last 3 years) is 66.50% above industry average
Classification:
LPLA, is amongst the top 20% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.61
Statistical test of Returns:
LPLA has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
3.09%
Weekly Volatility:
6.90%
Monthly Volatility:
13.80%
Yearly Volatility:
47.81%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.81%
Volatility in last five trading days has been -73.74% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-6.16%
Weekly VaR:
-13.78%
Monthly VaR:
-27.57%
How Much Can the price of
LPLA
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-22%
Worst case (decline):
>85%
This translates to price declining to:
$170.19
This translates to price declining to:
$32.89
Severe Crash Probability
Risk of crash in next 6/12 months: Very high (>70%)
What is Value at Risk (VaR)?
Risk Fundamentals
LPLA is a 94.56% riskier investment compared to the market/S&P 500 & is 66.68% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is 12.32% above industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
LPLA
Beta in relation to market/S&P 500--0.94
Expected beta in 1 year's time:
0.686
Expected beta in 3 year's time:
0.971
Unlevered (debt free) Beta:
0.407
Beta in relation to Nasdaq (XNAS):
1.034
Beta in relation to all global stocks::
1.071
Beta Comparison & Analysis
Beta of competitors/peers::
1.048
Beta is -10.74% lower than peers
Average Industry Beta:
1.144
Beta is -18.25% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
24.20%
Sustainable growth rate is 5.43% above industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.322
Alpha is 128.63% above industry average alpha yield
Alpha is 2047% higher than market/& is unsustainably high
Analysis of Cost of Capital of
LPLA
Equity cost of capital:
0.096
Equity cost of capital is -13.02% below industry mean WACC
Unlevered (without debt) cost of capital:
4.16%
Before-tax cost of debt:
3.61%
After-tax cost of debt:
2.85%
Overall debt rating:
Upper medium A grade (third highest grade),CO8<=0.0429,"Medium BBB grade (Fourth highest grade)
Weighted average cost of capital (WACC):
2.85%
WACC is -28.35% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$30.56
Revenue growth rate per share of (3Y):
10.08
Annual revenue growth rate is -43.43% below industry average
EPS:
$5.68
Expected Annual growth rate of EPS (3Y):
-6.01%
Expected future EPS growth rate is -111.45% lower than the Capital Markets industry
Free cash flow (FCF) per share:
$0.88
Balance sheet equity growth per share: -0.38%
Equity growth rate per share is -100.38% lower than the industry
Debt per share
$37.04
EBITDA per share
$12.04
Valuation Analysis Today of
LPLA
P/E Ratio:
35.39
P/E Ratio of Competitors/Peers:
20.02
P/E ratio is 76.79% higher than main peers & is 77.02% higher than the industry
Stock price/value with industry average P/E ratio: $113.57
LPLA is 93.06% overvalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $20.94
Present value of the expected future dividends only: $10.46
P/S (Price to Sales ratio):
7.17
Price to sales ratio is 67.43% above the industry mean
P/B (Price to book value ratio):
10.08
Price to free cash flow: 248.99
Price to free cash flow ratio is 154.69% higher than the industry
Net income growth rate (3Y):
15.00%
Net income growth rate is -112.41% lower than the industry average net income growth rate
Dividend Analysis
Dividend payout rate: 4.31%
Dividend yeild: 0.46%
Previous Dividend: $0.25
Previous adjusted dividend: $0.25
Previous Dividend: $1.00
-
-
Average dividend payment (long-term): $0.25
Average dividend increase/decrease (growth rate) % per period: 0.00%
Expected next dividend payment date: 22/09/2022
Expected next dividend record date: 09/07/2022
-
Previous dividend payment date: 24/06/2022
Previous dividend record date: 06/09/2022
-
Dividend History:
2022-06-08--$0.25
2021-11-09--$0.25
2021-05-21--$0.25
2022-03-14--$0.25
2021-08-12--$0.25
2021-03-15--$0.25
-
In-depth Debt & Leverage Analysis
Debt to equity ratio:
170.32%
Net debt to equity ratio:
112.12%
Debt to assets ratio:
38.01%
Net debt to assets ratio:
25.03%
Debt-to-asset ratio is -48.75% below industry average
Ability to repay debt:
Interest coverage ratio:
9.01
Interest coverage ratio is -82.35% less than industry average
Looking forward:
Debt growth rate:
17.68%
Annual debt growth is -20% lower than industry average debt growth rate
Debt repayment rate in last quarter: 10.80%
Analysis of Key Statistics
Correlation of price movement with the market:
0.704
Statistical significance of correlation:
LPLA has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.637
Stock price is 10.54% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.637
Correlation of price movement with Nasdaq (^IXIC):
0.033
Covariance of price movement with the market:
0.059
Kurtosis
13.54
Returns have severe fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are considerably more likely, compared to assets with normally distributed returns
Skewness of returns:
0.285
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
LPLA
Gross Profit Margin Ratio:
-32%
Operating Profit Margin Ratio:
24.67%
Operating profit margin is 27.35% higher than the industry
Net Profit Margin Ratio:
-32%
Effective Tax Rate:
23.88%
Effective tax rate is 20.20% higher than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
26.74%
Return on equity (ROE) is 9.75% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
5.97%
Return on assets (ROA) is 8.79% higher than the industry
Financial Leverage:
1.6x
Current Ratio:
0
-
Cash Conversion Cycle (days):
0
-
The remaining useful life of property plant & equipment is: 0.0 years
Stock based compensation to net income ratio:
2.88%
In-depth Efficiency Analysis
Revenue generated per employee:
399.7K
Each employee generates -78% less revenue than industry average revenue per employee
EBITDA generated per employee:
157.5K
Each employee generates -44% less EBITDA than industry average revenue per employee
Profit generated per employee:
76.1K
Each employee generates -55% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
- 24.4K
Each employee generates 5% more free cash flow than industry average revenue per employee
Assets/Capital per employee
493.6K
Each employee generates 5% more free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
LPLA
FIRST CITIZENS BANCSHARES, INC. (XNAS:FCNCA)
MARKETAXESS HOLDINGS INC. (XNAS:MKTX)
ARCH CAPITAL GROUP LTD. (XNAS:ACGLO)
ACGLP
HBANO
XP Inc. (XNAS:XP)
EAST WEST BANCORP, INC. (XNAS:EWBC)
TMTSU
NEWHOLD INVESTMENT II UNT (XNAS:NHICU)
Current Analyst Ratings
Strong buy�4%
Buy�17%
Hold�17%
Sell�4%
Strong sell�0%
Overall analyst sentiment is: Buy
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
2.44B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
814.23M
- 198692.00K
-
834.93M
1.17B
335.11M
-
-
29.80M
106.57M
244.41M
960.54M
601.33M
463.99M
609.57M
145.58M
463.99M
Statement of Cash Flow
Date:
Period:
66.65M
Differed Income Tax :
- 219.00K
Stock Based Compensation :
13.34M
Change in Working Capital :
- 339189.00K
Accounts Receivables:
- 45234.00K
Other Working Capital:
6.70M
Other Non-Cash Items:
50.55M
Net Cash Provided by Operating Activities:
- 75117.00K
Investments in PP&E:
-
Net Acquisitions:
-
Purchases of Investments:
- 2434.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
1.01B
-
1.01B
1.37B
-
-
-
777.86M
1.64B
433.93M
156.46M
-
-
3.01B
10.78B
7.77B
480.57M
-
-
-
-
-
2.95B
-
3.14B
9.18B
6.04B
129.00K
2.44B
-
-
March 31, 2022 at 6:00:00 AM
-
1.74B
7.77B
-
2.95B
1.9B
1.25M
- 73545.00K
- 74729.00K
- 357832.00K
-
- 50006.00K
- 20013.00K
252.41M
- 175446.00K
-
- 325292.00K
1.75B
2.07B
- 75117.00K
- 73545.00K
- 148662.00K
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
LPLA
2023
2024
2025
2026
2027
$219.61
$233.41
$248.08
$263.68
$280.26