Shares of LPL Financial Holdings Inc (NASDAQ:LPLA) are down huge today, making some investors question if financial advising is a thing of the past. The reason for today’s stock decline has more to do with an earnings report that missed esitmate by a large margin than investors cashing out of their financially managed accounts.
The earnings report was a bit gloomy for LPL Financial Holdings Inc (NASDAQ:LPLA), which reported earnings per share of just $0.37 for the latest quarter, falling well short of analysts’ expectations of $0.51 per share and year-over-year numbers of $0.66 per share. This does, however, make some question why the earnings fell so significantly. Could it be that investors are beginning to trade stocks and manage their fund more independently?
“The market environment was volatile and challenging in 2015, particularly in the fourth quarter,” said CEO Mark Casady. “For the year, we grew our advisory fees, trailing commissions and attachment revenues and lowered our share count. However, these results were more than offset by slower brokerage sales and our planned core G&A investments in legal and compliance. Adjusted earnings per share totaled $2.22 in 2015, a decrease of $0.22 from 2014. And our GAAP earnings per share totaled $1.74, a decrease of 1% versus the prior year. The fourth quarter brought greater challenges. Brokerage sales were the slowest for the year and advisory fees were down due to the equity market decline at the end of the third quarter. Alternative investments were a large factor, as commissions were down by about 75% from a year ago. At the same time, we managed our expenses below the low end of our outlook, as you would expect, in this environment.”
The stock is down 31.71% or $8.01 following the news, hitting $17.25 per share. Approximately 4,110 shares traded hands. LPLA shares have declined 43.36% since July 9, 2015 and are currently downtrending. It has underperformed the S&P500 by 33.89%.
From a total of 3 analysts covering LPL Financial Holdings (NASDAQ:LPLA) stock, 0 rate it a “Buy”, 2 a “Sell”, and 1 a “Hold”. This means that 0 of the ratings are positive. The highest target price is $49 while the lowest target price is $27. The mean of all analyst targets is $39.33 which is 128.00% above today’s ($17.25) stock price. LPL Financial Holdings was the topic of 13 analyst reports since August 6, 2015 according to the firm StockzIntelligence Inc. Citigroup downgraded shares on January 12 to a “Sell” rating.
The institutional sentiment decreased to 0.96 in Q2 2015. It’s down 0.13, from 1.09 in 2015Q2. The ratio turned negative, as 32 funds sold all their LPL Financial Holdings Inc shares they owned while 57 reduced their positions. 21 funds bought stakes while 64 increased their total positions. Institutions now own 100.86 million shares which is 4.05% less than the previous share count of 105.11 million in 2015Q2.
Hmi Capital Llc holds 23.01% of its total portfolio in LPL Financial Holdings Inc, equating to 1.85 million shares. Fairview Capital Investment Management Llc owns 3.51 million shares representing 12.34% of their total US portfolio. Moreover, Fpr Partners Llc has 10.45% of their total portfolio invested in the company, equating to 10.49 million shares. The California-based Dragoneer Investment Group Llc has a total of 9.35% of their portfolio invested in the stock. Stockbridge Partners Llc, a Massachusetts-based fund reported 3.95 million shares owned.
LPL Financial Holdings Inc. is an independent broker-dealer, a custodian for registered investment advisors and an independent consultant to retirement plans. The company has a market cap of $1.64 billion. The Firm provides a platform of brokerage and investment advisory services to independent financial advisors, including financial advisors at around 700 financial institutions, enabling them to provide their retail investors with objective financial advice. It has 8.86 P/E ratio. It also supports approximately 4,400 financial advisors who are affiliated and licensed with insurance companies through customized clearing services, advisory platforms, and technology solutions.