LPL Financial Holdings Inc. Fundamental Analysis (NASDAQ: LPLA)
LPL Financial Holdings Inc. Fundamental Analysis (NASDAQ: LPLA)
LPL Financial Holdings Inc. (NASDAQ: LPLA) shows moderate financial fundamentals with a PE ratio of 17.34, profit margin of 6.83%, and ROE of 24.65%. The company generates $20.2B in annual revenue with strong year-over-year growth of 37.18%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 74.4/100 based on profitability, valuation, growth, and balance sheet metrics. The B grade reflects solid fundamentals with room for improvement in valuation or growth.
Fundamental Health Score
We analyze LPLA's fundamental strength across five key dimensions:
Efficiency Score
WeakLPLA struggles to generate sufficient returns from assets.
Valuation Score
ExcellentLPLA trades at attractive valuation levels.
Growth Score
ModerateLPLA shows steady but slowing expansion.
Financial Health Score
ModerateLPLA shows balanced financial health with some risks.
Profitability Score
ModerateLPLA maintains healthy but balanced margins.
Key Financial Metrics
Is LPLA Expensive or Cheap?
P/E Ratio
LPLA trades at 17.34 times earnings. This indicates a fair valuation.
PEG Ratio
When adjusting for growth, LPLA's PEG of 0.29 indicates potential undervaluation.
Price to Book
The market values LPL Financial Holdings Inc. at 4.10 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 5.26 times EBITDA. This is generally considered low.
How Well Does LPLA Make Money?
Net Profit Margin
For every $100 in sales, LPL Financial Holdings Inc. keeps $6.83 as profit after all expenses.
Operating Margin
Core operations generate 12.83 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $24.65 in profit for every $100 of shareholder equity.
ROA
LPL Financial Holdings Inc. generates $7.01 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
LPL Financial Holdings Inc. generates limited operating cash flow of $1.76B, signaling weaker underlying cash strength.
Free Cash Flow
LPL Financial Holdings Inc. produces free cash flow of $997.81M, offering steady but limited capital for shareholder returns and expansion.
FCF Per Share
Each share generates $12.81 in free cash annually.
FCF Yield
LPLA converts 4.29% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
17.34
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
0.29
vs 25 benchmark
P/B Ratio
Price to book value ratio
4.10
vs 25 benchmark
P/S Ratio
Price to sales ratio
1.16
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
1.34
vs 25 benchmark
Current Ratio
Current assets to current liabilities
1.53
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.25
vs 25 benchmark
ROA
Return on assets percentage
0.07
vs 25 benchmark
ROCE
Return on capital employed
0.16
vs 25 benchmark
How LPLA Stacks Against Its Sector Peers
| Metric | LPLA Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 17.34 | 20.35 | Better (Cheaper) |
| ROE | 24.65% | 610.00% | Weak |
| Net Margin | 6.83% | 641.00% | Weak |
| Debt/Equity | 1.34 | 0.91 | Weak (High Leverage) |
| Current Ratio | 1.53 | 799.65 | Neutral |
| ROA | 7.01% | -77.00% (disorted) | Weak |
LPLA outperforms its industry in 1 out of 6 key metrics, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews LPL Financial Holdings Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
191.42%
Industry Style: Value, Dividend, Cyclical
High GrowthEPS CAGR
83.90%
Industry Style: Value, Dividend, Cyclical
High GrowthFCF CAGR
-153.94%
Industry Style: Value, Dividend, Cyclical
Declining