Interactive Brokers is the IBD Stock Of The Day as it finds key technical support amid the bull run for stocks. On Monday, Interactive Brokers stock offered an early entry.
The bull market for stocks and cryptocurrencies remains intact, but has faced recent volatility. As a result, Interactive Brokers offers the potential for further earnings growth on higher trading activity and margin lending. DARTs, or daily average revenue trades — a key metric — continued to grow in October and November after surging 42% in the third quarter, the company said.
Many of Interactive's customers are sophisticated investors and professional traders. The company touts lowers margin rates than Charles Schwab, Fidelity, E-Trade and Vanguard. Upstart rival Robinhood Markets is on the IBD 50 list of top growth stocks.
Recent volatility has shifted the stock market status to uptrend under pressure. That means investors should be careful about new purchases in the current market.
Interactive Brokers Stock
Shares of the brokerage firm rose almost 1% on the stock market today. Interactive Brokers stock bounced further above support at the 50-day moving average, offering an early entry around 172.50.
The relative strength line for IBKR stock has also pulled back a bit. The RS line rallied to record highs in November. A rising RS line means that a stock is outperforming the S&P 500 index. It is the blue line in the chart provided.
The financial stock scored two successful breakouts this year. It has almost doubled from an 89.72 buy point cleared in January, according to MarketSurge pattern recognition.
Interactive Brokers Earnings
The IBD Stock Checkup tool shows that Interactive Brokers stock earns a near-perfect Composite Rating of 98 out of 99. The rating rolls various fundamental and technical metrics into one easy-to-use score.
Additionally, Interactive shares hold an RS Rating of 95 and EPS Rating of 66, out of a best-possible 99.
In the third quarter, Interactive Brokers earnings grew 13% as sales rose 19%. The brokerage firm slightly missed earnings estimates amid higher costs and a one-time charge.
However, revenue from commissions jumped 31% as DARTs soared 42%. Customer accounts surged 28%. Net interest income grew 8%.
Momentum continues in the fourth quarter. DARTs jumped 74% in November vs. a year ago and 17% vs. the prior month, the company said. In October, DARTs leaped 46% vs. a year ago and 7% vs. a month ago.
Analysts expect Interactive Brokers to keep growing, albeit at a slower pace. They see Interactive Brokers earnings rising about 18% in 2024 and a 3% gain in 2025. Earnings boomed 42% in 2023. Sales are seen more than doubling in 2024 and falling 10% in 2025.
Innovations Powering Growth
Interactive Brokers says its focus on innovation continues to drive growth.
Among new launches this quarter alone, the company announced an enhanced desktop trading platform with new tools such as options screeners. It also launched AI-powered news summaries and election forecast contracts ahead of the November U.S. election.
According to TheFly.com, analysts at Barclays recently affirmed a constructive macroeconomic backdrop for stock brokers, asset managers and stock exchanges heading into 2025. The firm hiked its price target on IBKR stock to to $214 from $165 with an overweight rating on shares.
Year to date, Interactive Brokers stock has more than doubled, soaring 113.5%. That includes a 27% leap this quarter amid earnings and elections.
Financial and bank stocks broadly led the stock market's November rally. Investors bet that incoming President Donald Trump's administration will loosen regulations, which should especially help this heavily regulated sector.
Please follow Aparna Narayanan on X @IBD_Aparna for more coverage.
