The year 2025 is turning out to be good for Interactive Brokers Group, Inc. IBKR. The stock has soared 25.4% year to date. In contrast, its close peers, Charles Schwab SCHW, has gained 12.5%, while Tradeweb Markets Inc. TW lost 4.9%.
Additionally, IBKR shares have outperformed the financial investment bank industry and the S&P 500 Index in the same time frame.
YTD IBKR Stock Price Performance
Image Source: Zacks Investment Research
Technical indicators also suggest continued strength for Interactive Brokers. At present, the stock is trading above its 50-day and 200-day moving average, indicating a bullish trend.
IBKR 50-Day & 200-Day Moving Average
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This underscores positive market sentiments and confidence in the company's financial health and prospects.
Tailwinds to Support Interactive Brokers
Tax Cuts: The brokerage industry is set to benefit from anticipated tax cuts by the Trump-led administration. This will likely increase disposable income for individuals, inducing further retail investment activity and leading to higher trading revenues.
Favorable Regulations: Favorable regulations will lower compliance costs for brokerage firms, allowing easier introduction of innovative products and services, including crypto-related offerings. This will enhance product velocity so that industry players can capitalize on emerging trends rapidly and gain market share.
Domestic Manufacturing & Tariff Policies: A focus on domestic manufacturing, deregulation and tax cuts will likely foster further economic growth, resulting in higher institutional and retail trading activity.
Also, the tariff policies have increased market volatility and boosted trading volumes. Hence, this will benefit brokerage firms through higher commission income and spreads. Interactive Brokers is well-poised to benefit from this as it engages in diverse financial instruments, including commodity, foreign exchange and equities.
Other Emerging Industry-Wide Trends: Emerging trends such as 24-hour trading, fractional share trading, no-commission model, AI-based investment advisory services and expansion into alternative investments such as cryptocurrencies are expected to amplify the brokerage industry’s growth potential.
Interactive Brokers has already adopted several trends, such as 24-hour trading for selected securities, no-commission model, fractional share trading and trading in crypto and other alternative asset classes, signifying its capability to cater to investors’ rapidly changing demands.
Initiatives Undertaken by IBKR
Global Exposure Through Product Diversification: IBKR has been taking several steps to enhance its presence globally. This week, the company announced the expansion of its offering of Stocks and Shares Investment Savings Accounts with the addition of mutual funds in the U.K. This would allow investors to access a wide range of investment products in a tax-efficient savings vehicle along with advanced trading platforms, low fees and global diversification.
Last November, IBKR launched Plan d’Epargne en Actions accounts to boost its offerings for its French clients. Also, the launch of IBKR GlobalTrader has enabled investors worldwide to trade stocks through mobile applications.
The company was one of the first brokers to introduce Overnight Trading on U.S. stocks and ETFs nearly 24 hours a day, five days a week. IBKR Lite has enabled investors to trade commission-free. Further, it launched cryptocurrency trading via Paxos Trust Company, charging lower commissions compared with other crypto exchanges. The introduction of IBKR Desktop, the next-generation desktop trading application for Windows and Mac, marks a new chapter for innovation.
The company’s technological superiority combined with easier regulations to improve product velocity will likely help its net revenues through higher client acquisitions.
Technological Excellence: Interactive Brokers’ technological superiority remains one of its strongest aspects. The company processes trades in stocks, futures, options and forex on more than 150 exchanges across several countries and currencies.
IBKR’s compensation expense relative to net revenues (11.1% in 2024) remains below its industry peers on the back of its superior technology. Further, the company has been emphasizing developing proprietary software to automate broker-dealer functions, leading to a steady rise in revenues. Total net revenues witnessed a compound annual growth rate (CAGR) of 21.8% over the last five years (2019-2024).
Net revenues are expected to improve further in the quarters ahead, given the solid DART numbers and robust trading backdrop on the back of higher market participation.
IBKR Sales Estimates
Image Source: Zacks Investment Research
Analyst Sentiments Bullish for Interactive Brokers
Over the past month, the Zacks Consensus Estimate for 2025 earnings of $7.39 has been revised 2.5% upward, while the same for 2026 earnings has moved 11.7% north to $8.03.
Estimate Revision Trend
Image Source: Zacks Investment Research
The projected figures imply a rise of 5.1% and 8.6% for 2025 and 2026, respectively.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
IBKR Shares Are Inexpensive
Despite the solid rally in IBKR shares, it appears inexpensive relative to the industry. The company is currently trading at the 12-month trailing price-to-tangible book (P/TBV) ratio of 1.46, below the industry’s 3.05.
IBKR Price-to-Tangible Book Ratio (TTM)
Image Source: Zacks Investment Research
Also, the stock is trading well below its peers, Tradeweb and Schwab. At present, TW and SCHW’s 12-month trailing P/TB TTM ratios are 14.42 and 8.39, respectively.
From a valuation perspective, Interactive Brokers’ shares present a compelling buying opportunity. The stock is still undervalued as the market has not yet fully recognized or priced the company’s growth prospects.
Momentum to Continue for Interactive Brokers
Interactive Brokers remains well-positioned for growth in light of anticipated favorable policies to be implemented by the Trump administration. Additionally, rapidly evolving trends will likely benefit the company’s revenues and expand its market share.
The company’s strong technological capabilities and diversified product offerings enhance its global reach, further supporting long-term growth. Positive analyst sentiment adds another layer of optimism. Hence, IBKR presents an attractive opportunity for value investors, as the stock is currently trading at a discount.
At present, IBKR sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here
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The Charles Schwab Corporation (SCHW) : Free Stock Analysis Report
Interactive Brokers Group, Inc. (IBKR) : Free Stock Analysis Report
Tradeweb Markets Inc. (TW) : Free Stock Analysis Report
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