The industry’s top independent broker-dealer now has 22,404 advisors, a record-high headcount.
Despite a small slide in profits, LPL Financial had another healthy quarter in advisor recruitments and organic asset growth, and is looking ahead to domination of the entire advisor industry.
“This quarter we continued to see the appeal of our model grow due to the combination of our robust and feature-rich platform, the stability and scale of our industry-leading model, and our capacity and commitment to invest back into the platform,” said Dan Arnold, the CEO and president of LPL, in an earnings call Thursday with analysts. He added that the firm’s goal is to eventually “compete for all 300,000 advisors in the marketplace.”
Arnold said the firm’s strategy involves “horizontal expansion, where we look to expand the ways that advisors and enterprises can affiliate with us, and vertical integration, where we focus on providing capabilities that solve for a broader spectrum of advisor needs.”
The firm repurchased $250 million in shares during the quarter and beat Wall Street expectations with adjusted earnings per share of $3.74, which was 5% above the analyst consensus of $3.57.
“We remain quite encouraged by the robust organic growth the company continues to demonstrate,” analysts at JMP Securities said of LPL in a note on Friday. LPL appears significantly undervalued in the market, the analysts said, noting that it showed potential for “faster growth and higher capital return than the average S&P 500 company but a notable discount to the S&P’s forward P/E of 17.4x.”
“LPL is taking advantage of its elevated revenue in a period of above-normal interest rates to invest back into the business where it can move the needle on growth, but also deliver respectable results for shareholders,” the analysts said, rating LPL “market outperform.”
The analysts maintained that LPL could “continue expanding the organic growth rate from upper-single digits currently into the double digits over the next couple of years, which would put the firm at the top of the industry.”
To see the main takeaways from LPL’s third-quarter earnings, scroll down the slideshow. For coverage of the firm’s second-quarter earnings, click here. For a look at the results from the first quarter, click here.