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Understanding Interactive Brokers Group’s Higher Valuation

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Dec. 20 2017, Updated 9:00 a.m. ET

Higher valuation multiple

Interactive Brokers Group’s (IBKR) next-12-month PE (price-to-earnings) ratio is 36.0x, higher than the peer average of 17.0x. Peers Financial Engines (FNGN), Raymond James Financial (RJF), and LPL Financial Holdings (LPLA) have ratios of 19.6x, 14.6x, and 16.9x, respectively. Interactive Brokers’ higher valuation may be due to its strong 3Q17 results. The company’s commissions, net interest income, and total revenue rose between 3Q16 and 3Q17.

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Bitcoin futures

As Interactive Brokers has allowed customers to trade bitcoin futures, its valuation is expected to rise. Higher trading volumes could also boost its valuation. While Interactive Brokers’ last-12-month PE ratio is 52.0x, peers (XLF) Raymond James Financial (RJF), Financial Engines (FNGN), and LPL Financial Holdings (LPLA) have ratios of 20.0x, 36.8x, and 23.3x, respectively.

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