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Interactive Brokers Missed Earnings, Beat Revenue Estimates

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Missed earnings estimate

Interactive Brokers Group (IBKR) has declared its 4Q17 and 2017 results, posting EPS (earnings per share) of -$0.02 in 4Q17. That missed Wall Street analysts’ estimates by $0.42. Reforms to the US tax code provided a headwind for its 4Q17 results.

For 2017, Interactive Brokers’ diluted EPS on a comprehensive basis was $1.22. In 2016, it was $1.19. However, the recent tax reforms acted as a headwind for the company’s 2017 results and led to diluted EPS falling $0.46.

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Revenue estimates

Interactive Brokers reported revenues of $515 million in 4Q17, thus exceeding Wall Street analyst estimates by $116.6 million. In 4Q17, the company generated pre-tax income of $364 million. However, in 4Q16, it posted net revenues of $193 million with pre-tax income of $28 million.

Interactive Brokers’ 4Q17 results were helped by a favorable momentum in net interest income and commissions, which rose 48% and 13%, respectively, compared to 4Q16. It saw an unfavorable momentum in trading gains, which fell 64% compared to 4Q16 due to a fall in its market-making trading volumes.

Interactive Brokers’ return on assets stood at 1.1% on an LTM (last 12-month) basis. Peers (XLF) Morgan Stanley (MS), Bank of America (BAC), and Wells Fargo (WFC) had returns on assets of 0.87%, 0.91%, and 1.2%, respectively on an LTM basis.

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