IBKR

We rate Interactive Brokers Group, Inc. (IBKR) as Avoid with a composite score of 35.3/100 at a current price of $71.93. The stock falls in the bottom quintile of our universe across key quantitative factors, and the multi-factor weakness suggests a high probability of continued underperformance.

The rating is primarily driven by strength in momentum (34th percentile) and value (32th percentile), which together account for the majority of the composite score. Offsetting weakness in stability (11th percentile) and quality (21th percentile) tempers our overall conviction. We assign a No Moat rating (27/100), Very High uncertainty, and Standard capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs; balance sheet deleveraging progress; sustainability of the current growth rate. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Interactive Brokers Group, Inc. holds a top-quartile position (#0 of 50) within the Finance, Insurance, And Real Estate sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 35.3/100 places it at rank #4079 in our full 7,333-stock universe. With a $30.6B market capitalization, Interactive Brokers Group, Inc. operates at meaningful scale within the Finance, Insurance, And Real Estate sector, providing competitive advantages in distribution, procurement, and customer reach.

Revenue is growing at 27%, though momentum at the 34th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 0% (-76.5pp vs sector) narrow to operating margins of 192% (+174.5pp vs sector) and net margins of 174.5%, yielding a gross-to-net conversion rate of N/A%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $71.93, Interactive Brokers Group, Inc. is trading at a premium to fundamental value. Our value factor score of 32/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The premium valuation implies the market is pricing in significant future growth or quality improvements that are not yet fully reflected in current fundamentals.

The stock currently trades at a P/E of 8.3x (a 30% discount to the sector median of 11.9x), EV/EBITDA of 7.6x (near the sector median), P/B of 1.7x, P/S of 14.5x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a Very High uncertainty rating to Interactive Brokers Group, Inc.. The stock exhibits multiple compounding risk factors: elevated market sensitivity (beta of 1.74), significant leverage (928% debt-to-equity), below-average price stability (11th percentile). The extreme uncertainty around future cash flows makes precise valuation difficult, and the range of outcomes is exceptionally wide. Only investors with high risk tolerance and extended time horizons should consider this name.

Specific risk factors that inform our assessment include: elevated market sensitivity (beta of 1.74); significant leverage (928% debt-to-equity); below-average price stability (11th percentile); weak quality scores (21th percentile). Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 11th percentile and quality factor at the 21th percentile provide a quantitative summary of the overall risk landscape.

We identify limited risk mitigants at this time, which contributes to our very high uncertainty assessment. Investors should monitor for improvement in balance sheet metrics, margin stability, and business predictability that could warrant a downgrade in our risk assessment over time.

We rate Interactive Brokers Group, Inc.'s capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 20.5%, and the balance sheet is managed within acceptable parameters (D/E: 928%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; Interactive Brokers Group, Inc. falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. The 0.41% dividend yield provides some income return, but the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, Interactive Brokers Group, Inc. receives a Avoid rating with a composite score of 35.3/100 (rank #4079 of 7,333). Our quantitative framework assigns a No Moat (27/100, trend: stable), Very High uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 24/100.

Our analysis does not support a constructive view on Interactive Brokers Group, Inc. at this time. The combination of limited competitive advantages, very high uncertainty, and standard capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.