Interactive Brokers Group, Inc.

Based on a comprehensive analysis of Interactive Brokers (IBKR), the stock presents a mixed but ultimately compelling case for long-term investors.

Technical & Fundamental Assessment Technically, IBKR shows strong recovery momentum, approaching its 52-week high without being severely overbought, suggesting room for continued growth. Fundamentally, the company is a powerhouse with exceptional revenue growth and a robust, nearly debt-free balance sheet, though high tax rates currently pressure net profitability. Its high beta of 1.24 confirms it is a more volatile stock, best suited for investors comfortable with market swings.

Valuation & Investment Case Valuation sends mixed signals; the low trailing P/E suggests value, while the high forward P/E and P/S ratios indicate the market is pricing in significant future growth. The core investment thesis rests on IBKR's dominant position in electronic brokerage, its operational efficiency, and its leverage to secular trends like increased retail and institutional trading.

Recommendation *Buy.* IBKR is a high-quality operator in a growing industry, and its current fundamentals support a long-term growth story. While the stock is volatile and its valuation demands that growth materialize, its strong market position and financial health make it a worthwhile holding for investors seeking exposure to the financial technology sector. Investors should view any market pullbacks as potential buying opportunities.

RockFlow Model Forecast: Three Scenarios for 2026

Based on the provided analysis, here is a 12-month outlook for Interactive Brokers (IBKR):

12-Month Outlook for IBKR

The outlook for IBKR over the next year is positive, driven by key catalysts such as its dominant market position, operational efficiency, and leverage to secular growth in electronic trading from both retail and institutional clients. The primary risk is its high beta of 1.24, making it susceptible to significant volatility and potential pullbacks if broader markets weaken, while its elevated forward valuation necessitates that strong growth expectations are met. Although a specific analyst target is not provided, the stock's strong momentum and fundamental health suggest a target price range in the mid-to-high $70s, with the potential to exceed this if earnings growth accelerates and validates its premium valuation.

Wall Street Consensus

Most Wall Street analysts are optimistic about Interactive Brokers Group, Inc.'s 12-month outlook, with consensus target around $73.36, indicating expected upside potential.

Overall, IBKR has investment potential but also faces challenges. Here are key factors to weigh before investing.

IBKR has demonstrated strong recovery momentum, nearly doubling from its 52-week low, though it remains marginally below recent highs.

The stock posted a solid 6.86% gain over the past month, partially offsetting the 2.8% decline over three months; however, it has underperformed the broader market by 6.17% during this period. Its beta of 1.24 indicates higher volatility than the market.

Currently trading just 3.8% below its 52-week high, the stock appears to be in an extended uptrend but not severely overbought given its substantial recovery from a 38.74% maximum drawdown earlier in the year.

Of course. Here is a fundamental analysis of Interactive Brokers (IBKR) based on the provided data.

**Revenue & Profitability**

IBKR demonstrates robust top-line performance with significant revenue growth quarter-over-quarter, rising from $2.47 billion in Q2 to $2.79 billion in Q3. The company maintains an exceptionally high gross profit margin of approximately 89.5%, indicating a highly efficient core brokerage operation. However, a very high effective tax rate of 60.4% in Q3 significantly pressured net income, resulting in a net profit margin of just 9.4%, which is substantially lower than the pre-tax profit margin of 107%. This suggests that profitability is currently more impacted by tax obligations than operational costs.

**Financial Health**

The company exhibits a very strong financial position with minimal debt, reflected in a low debt-to-equity ratio of 0.18. Liquidity is adequate, with a current ratio of 1.15, though the cash ratio is relatively low at 0.03, indicating that current assets are largely composed of non-cash items like customer securities. The interest coverage ratio of 1.9 is acceptable but indicates that operating income is only about twice the interest expense, a point to monitor, though the low overall debt level mitigates this concern.

**Operational Efficiency**

Operational efficiency is mixed. The return on equity (ROE) is a modest 5.15%, which is relatively low and can be attributed to the high equity base typical of a broker-dealer holding client assets. The asset turnover ratio is very low at 0.014, which is expected for this business model as total assets are inflated by large segregated customer cash and securities. The high company equity multiplier of 39.2 confirms that the business is highly leveraged from an accounting perspective due to its structure, but this primarily represents client balances rather than corporate debt.

Based on the provided metrics, IBKR appears modestly valued on a trailing basis but richly valued on a forward-looking basis. The TTM P/E of 7.88 is exceptionally low, suggesting the market is pricing the stock at a significant discount to its current earnings, which could indicate undervaluation or reflect non-recurring income. However, the forward P/E of approximately 29.0 and a PEG ratio of 1.85 signal a much higher premium for *expected* future growth, implying the stock is fairly valued to slightly overvalued if that growth does not materialize as anticipated. The Price-to-Sales (P/S) ratio of 13.79 is very high, indicating investors are paying a substantial premium for each dollar of revenue, which contrasts sharply with the low P/E and highlights a potential disconnect between current profitability and sales multiples.

A peer comparison is not possible with the provided industry average data being unavailable. To properly assess IBKR's valuation relative to its competitors in the capital markets or brokerage industry, key benchmarks such as industry-average P/E, P/B, and P/S ratios are essential. Without this context, it is only possible to analyze the stock on an absolute basis, where the high forward P/E and P/S ratios suggest the market has already priced in significant future growth, leaving little margin for error.

Volatility Risk: IBKR exhibits elevated volatility risk with a beta of 1.24, indicating it is 24% more volatile than the broader market. This is corroborated by a significant one-year maximum drawdown of -38.74%, highlighting substantial downside exposure during market corrections. Investors should be prepared for larger price swings compared to the market average.

Other Risks: While the absence of short interest mitigates speculative pressure or a potential short squeeze, liquidity remains a key consideration. As a broker-dealer, IBKR's stock performance is inherently tied to trading volumes and market activity, which can introduce cyclical revenue risks. The primary operational risk stems from market-sensitive revenue streams rather than shareholder-driven pressures.