Interactive Brokers
IBKR
$86.02
-3.07%
Interactive Brokers Group is a global automated electronic broker and market maker, providing professional-grade trading solutions across a wide range of asset classes, including stocks, options, futures, currencies, and bonds, to both retail and institutional clients. The company distinguishes itself as a technology-driven, low-cost leader in the brokerage industry, catering to sophisticated traders and investors with its advanced trading platforms, algorithmic trading capabilities, and competitive margin lending rates. The current investor narrative centers on the company's robust account growth (34% YoY as of June 2026) and record trading volumes, driven by the elimination of the PDT rule and increased market volatility, while also debating whether its premium valuation is justified by sustained growth or leaves it vulnerable to earnings misses.…
IBKR
Interactive Brokers
$86.02
Related headlines
Investment Opinion: Should I buy IBKR Today?
Rating: Buy. The thesis is that Interactive Brokers is a high-quality growth compounder with a durable competitive advantage, and the current valuation, while premium, is justified by its superior growth and profitability. The analyst consensus is 'Buy' with an average target of $106.97, implying 21.6% upside, and the company's fundamentals support this optimism.
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IBKR 12-Month Price Forecast
The AI assessment is bullish, driven by the company's exceptional operational metrics and growth trajectory. The premium valuation is a concern, but the strong fundamentals and positive analyst sentiment support a favorable outlook. The stance would be upgraded to high confidence if revenue growth accelerates above 20% and the stock maintains its upward momentum. Conversely, a downgrade to neutral would occur if growth decelerates below 10% or if the Fed signals aggressive rate cuts, which could pressure interest income.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Interactive Brokers's 12-month outlook, with a consensus price target around $106.30 and implied upside of +23.6% versus the current price.
Average Target
$106.30
0 analysts
Implied Upside
+23.6%
vs. current price
Analyst Count
—
covering this stock
Price Range
$70 - $121
Analyst target range
Interactive Brokers is covered by 12 analysts, with a consensus recommendation of 'Buy' and a mean rating of 1.75 (where 1 is Strong Buy and 5 is Sell). The average price target is $106.97, implying an upside of 21.6% from the current price of $87.99. The analyst sentiment is bullish, with no Sell ratings and a majority of Buy or Overweight ratings. Recent actions from B of A Securities, Barclays, Goldman Sachs, and Jefferies have all been positive, with no downgrades in the past six months. The target price range is $70.00 (low) to $122.00 (high), indicating a wide spread of 74% between the low and high targets, which reflects significant uncertainty about the company's future performance. The high target of $122 implies a P/E of 31x on estimated EPS, suggesting analysts expect continued strong growth and possibly multiple expansion. The low target of $70 implies a P/E of 17.8x, which could be justified if growth decelerates or market conditions deteriorate. The wide range suggests that while the consensus is bullish, there is considerable divergence in expectations, likely due to the cyclicality of trading volumes and interest rates. The recent upgrades and positive ratings from major firms indicate that institutional sentiment remains favorable, but the stock's high valuation leaves little room for error.
Bulls vs Bears: IBKR Investment Factors
Interactive Brokers presents a compelling growth story with robust account growth, high margins, and a pristine balance sheet, but the stock trades at a premium valuation that leaves little room for error. The bull case is supported by strong operational metrics and analyst optimism, while the bear case centers on valuation risk and sensitivity to interest rates and trading volumes. Currently, the evidence slightly favors the bulls given the momentum and market share gains, but the key tension is whether the company can sustain its growth trajectory to justify the premium P/E. If growth decelerates or interest income declines, the stock could face significant multiple compression.
Bullish
- Explosive Account and Trading Growth: Customer accounts surged 34% YoY and DARTs jumped 53% YoY in June 2026, indicating strong market share gains and heightened client engagement. This growth is broad-based and driven by the elimination of the PDT rule, which expands the retail trading addressable market.
- Superior Profitability and Margins: Gross margin is exceptionally high at 96.08% in Q1 2026, and operating margin improved to 87.26% from 83.94% a year ago. ROE stands at 18.35%, reflecting a highly efficient, asset-light business model that generates strong returns on equity.
- Fortress Balance Sheet: Debt-to-equity ratio is a mere 0.35%, essentially debt-free, with a current ratio of 1.13 and $58.5 billion in cash. This financial strength provides flexibility for growth initiatives and resilience against market downturns.
- Consistent Revenue Growth Trajectory: Revenue grew 16.93% YoY in Q1 2026 to $2.701 billion, with sequential growth from $2.469 billion in Q2 2025 to $2.749 billion in Q4 2025. The steady upward trend is supported by rising commissions (up 27% YoY) and robust interest income.
Bearish
- Premium Valuation Leaves No Room for Error: Trailing P/E of 28.84x is 31% above the industry average of 22x, and the forward P/E of 27.57x is near the high end of its historical range (13.7x to 35.4x). Any earnings miss could trigger multiple compression, as seen in Q1 when revenue fell short of expectations.
- Dependence on Interest Income: Interest income is a major revenue driver, with Q1 2026 interest income of $1.947 billion, but it is sensitive to Fed rate cuts. If the Fed lowers rates, net interest margins could compress, directly impacting profitability.
- High Beta Amplifies Downside Risk: With a beta of 1.329, the stock is 32.9% more volatile than the market. In a market sell-off, IBKR could decline more than the S&P 500, as evidenced by the 5.64% drop in the past month while the S&P gained 0.17%.
- Trading Volume Cyclicality: Revenue is heavily tied to trading volumes, which are cyclical and can decline in low-volatility environments. The 53% DART surge may not be sustainable, and a normalization could lead to revenue deceleration.
IBKR Technical Analysis
Interactive Brokers' stock has been in a strong uptrend over the past year, with a 34.21% price increase, significantly outperforming the S&P 500's 18.19% gain. The current price of $87.99 sits at 90% of its 52-week range (between $58.95 and $97.84), indicating the stock is trading near its highs, which reflects positive momentum but also suggests potential overextension. The stock's beta of 1.329 indicates it is 32.9% more volatile than the market, amplifying both upside and downside moves. Over the past three months, the stock has gained 9.36%, and over six months, it is up 17.51%, confirming the longer-term bullish trend. However, the one-month performance shows a decline of 5.64%, while the S&P 500 gained 0.17% in the same period, resulting in a relative strength of -5.81%. This short-term pullback from the July 15 high of $97.41 to the current $87.99 suggests a temporary correction or consolidation after a strong run, rather than a reversal, given the still-positive longer-term momentum. The stock's 52-week low of $58.95 provides strong support, while the 52-week high of $97.84 is the immediate resistance. A breakout above $97.84 could signal a continuation of the uptrend, while a breakdown below the recent low of $86.26 (July 29) might indicate further downside. The stock's beta of 1.329 means it is 32.9% more volatile than the market, so investors should expect larger swings and adjust position sizes accordingly.
Beta
1.34
1.34x market volatility
Max Drawdown
-18.8%
Largest decline past year
52-Week Range
$59-$98
Price range past year
Annual Return
+34.8%
Cumulative gain past year
| Period | IBKR Return | S&P 500 |
|---|---|---|
| 1m | -9.0% | +2.8% |
| 3m | +1.9% | +4.2% |
| 6m | +15.3% | +11.3% |
| 1y | +34.8% | +21.5% |
| ytd | +27.9% | +12.7% |
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IBKR Fundamental Analysis
Interactive Brokers reported Q1 2026 revenue of $2.701 billion, a 16.93% YoY increase from $2.31 billion in Q1 2025, driven by strong growth in commissions (up 27% to $613 million) and interest income. The company's revenue has been consistently growing, with Q4 2025 revenue at $2.749 billion, Q3 2025 at $2.704 billion, and Q2 2025 at $2.469 billion, showing a steady upward trajectory. The growth is broad-based, with customer accounts up 34% YoY and DARTs (daily average revenue trades) surging 53% YoY in June 2026, indicating strong client engagement and market share gains. The company's net income for Q1 2026 was $267 million, with a net margin of 9.89%, which is lower than the 10.33% in Q4 2025 but higher than the 9.22% in Q1 2025. Gross margin remains exceptionally high at 96.08% in Q1 2026, reflecting the asset-light, technology-driven business model. Operating margin was 87.26%, up from 83.94% in Q1 2025, indicating improving operational efficiency. The company's ROE is 18.35%, and ROA is 2.28%, demonstrating strong profitability relative to equity. Interactive Brokers maintains a fortress balance sheet with a debt-to-equity ratio of 0.35% (essentially debt-free) and a current ratio of 1.13, indicating ample liquidity. The company generated $3.611 billion in operating cash flow in Q1 2026, and free cash flow was $3.585 billion, resulting in a free cash flow yield of 1.81% based on the current market cap. The company's cash position is substantial, with $58.5 billion in cash at the end of Q1 2026, providing significant financial flexibility. The payout ratio is 13.6%, and the dividend yield is 0.47%, indicating a modest but sustainable dividend.
Quarterly Revenue
$2.7B
2026-03
Revenue YoY Growth
+16.9%
YoY Comparison
Gross Margin
96.1%
Latest Quarter
Free Cash Flow
$16.8B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is IBKR Overvalued?
Given that Interactive Brokers is highly profitable with a trailing net income of $1.038 billion, the P/E ratio is the most appropriate valuation metric. The trailing P/E is 28.84x, while the forward P/E is 27.57x, based on estimated EPS of $3.93 for the next fiscal year. The slight discount in the forward P/E suggests the market expects modest earnings growth, which is consistent with the company's PEG ratio of 1.05, indicating the stock is fairly valued relative to its growth rate. Compared to the industry average P/E of 22x (as per valuation data), IBKR trades at a 31% premium, reflecting its superior growth, high margins, and strong competitive position. The premium is justified by the company's 16.9% revenue growth and 18.35% ROE, which are well above industry averages. The stock's P/B ratio of 5.34x is also at a premium to the sector, but this is typical for asset-light financial firms with high returns on equity. Historically, IBKR's P/E has ranged from 13.7x (Q4 2022) to 35.4x (Q3 2021), with the current 28.84x near the higher end of its historical band. This suggests the market is pricing in optimistic expectations for continued growth, and any disappointment could lead to multiple compression. The P/S ratio of 2.80x is also elevated compared to its historical average of around 6x, indicating that the market is paying a premium for the company's revenue growth.
PE
28.8x
Latest Quarter
vs. Historical
High-End
5-Year PE Range 14x~35x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
11.7x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks are moderate but notable. The company's net margin of 9.89% is relatively thin, and its profitability is sensitive to interest rate changes, as interest income constitutes a large portion of revenue. With $1.947 billion in interest income in Q1 2026, a 100 basis point cut in rates could reduce net income by an estimated $100-200 million, impacting EPS. Additionally, the payout ratio of 13.6% and dividend yield of 0.47% are low, but the company's high cash flow generation (FCF yield of 1.81%) provides a cushion. Revenue concentration in trading volumes is a risk, as a downturn in market activity could lead to lower commissions and DARTs, directly affecting earnings.