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LPL Financial Holdings (LPLA) recently reported a cybersecurity incident in which malware distributed via phishing enabled unauthorized access to some advisor accounts, prompting remediation steps and fresh security measures that investors will want to understand.
See our latest analysis for LPL Financial Holdings.
The cybersecurity incident lands at a sensitive time for sentiment, with the 30 day share price return of 6.6% partly offsetting a 90 day share price decline of 11.49%. At the same time, the 5 year total shareholder return of 109.58% points to a very different long term picture.
If this security scare has you thinking more broadly about where you put your capital next, it could be worth widening your search using the 19 top founder-led companies
With LPL Financial trading at US$320.51 and shown as at a 23.70% intrinsic discount, plus a value score of 3, the key question is whether this is a genuine opportunity or if the market already reflects future growth potential.
At a last close of $320.51 against a narrative fair value of $405.14, the current setup hinges on how confidently you buy into the long term earnings story that analysts are modelling using a 9.21% discount rate.
The acquisition and successful integration of platforms like Atria and Commonwealth, combined with industry-leading asset retention, are enabling LPL to further leverage economies of scale and expand its market share, positioning the firm for stronger long-term earnings growth as these integrations are completed.
Read the complete narrative.
Want to see what sits behind that confidence in future earnings? The narrative leans heavily on rising fee based revenue, expanding margins and a reset earnings multiple. Curious which specific growth and profitability assumptions need to line up to justify that $405 fair value?
Result: Fair Value of $405.14 (UNDERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, this hinges on interest-rate-sensitive cash sweep revenues and successful M&A integration. Any disappointment in these areas could quickly challenge the current undervalued story.
Find out about the key risks to this LPL Financial Holdings narrative.
The SWS DCF model also points to LPL Financial trading below its estimated future cash flow value, with a fair value of $420.05 versus the current $320.51 share price. With both the narrative fair value and cash flow view indicating potential upside, which set of assumptions do you find more convincing?
