Let’s talk about the popular Interactive Brokers Group Inc (NASDAQ:IBKR). The company’s shares received a lot of attention from a substantial price increase on the NasdaqGS in the over the last few months. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Today I will analyse the most recent data on Interactive Brokers Group’s outlook and valuation to see if the opportunity still exists. Check out our latest analysis for Interactive Brokers Group
What is Interactive Brokers Group worth?
Interactive Brokers Group is currently overpriced based on my relative valuation model. I’ve used the price-to-equity ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 53.14x is currently well-above the industry average of 16.55x, meaning that it is trading at a more expensive price relative to its peers. But, is there another opportunity to buy low in the future? Since Interactive Brokers Group’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What kind of growth will Interactive Brokers Group generate?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. Interactive Brokers Group’s earnings over the next few years are expected to increase by 81.40%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? Interactive Brokers Group’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe Interactive Brokers Group should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on Interactive Brokers Group for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for Interactive Brokers Group, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.