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4 Reasons That Make LPL Financial Stock a Solid Pick Now


The earnings season is nearing its end and the finance sector can safely be called one of the best performers. So, we thought of highlighting LPL Financial Holdings Inc. LPLA from this sector that reflects strong fundamentals and solid long-term growth opportunity.

LPL Financial has been witnessing upward estimate revisions, reflecting analysts’ optimism. In the last 30 days, the Zacks Consensus Estimate for 2017 and 2018 increased 6.5% and 5.6%, respectively.

Further, this Zacks Rank #1 (Strong Buy) stock has rallied 12.5% in the last six months versus the industry’s loss of 0.3%.

LPL Financial has a number of other aspects that make it an attractive investment option.

Earnings per Share (EPS) Strength: LPL Financial has witnessed 28.7% growth in earnings per share over the last three to five years. The trend is expected to continue in the near term. The company’s projected EPS growth is 23.2% and 14.9% for 2017 and 2018, respectively.

Further, its long-term (three to five years) expected EPS growth of 14% promises rewards for shareholders.

Revenue Strength: LPL Financial’s revenues witnessed a CAGR of 2.6% over the last five years (2012–2016). Further, the top line is expected to grow 4.3% in 2017 versus industry’s flat performance.

Superior Return on Equity (ROE): LPL Financial has an ROE of 21.46%, far better than the industry average of 8.35%. This shows that the company reinvests its cash more efficiently.

Favorable VGM Score: LPL Financial has a VGM Score of A. Our research shows stocks with a VGM Score of A or B when combined with a Zacks Rank #1 or 2 (Buy) offer the best upside potential.

Other Stocks to Consider

Some other top-ranked stocks in the finance space are Raymond James Financial, Inc. RJF, E*TRADE Financial Corporation ETFC and Moelis & Company MC.

Raymond James Financial witnessed an upward earnings estimate revision of 3.3% for the current fiscal year, in the last 60 days. Its share price increased 9.8% in the last three months. The company currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here

E*TRADE Financial also carries a Zacks Rank #1. For the current year, in the last 60 days, its Zacks Consensus Estimate was revised 13.5% upward. The company’s share price increased 15.7% in the last three months.

Moelis & Company has a Zacks Rank #2. The company witnessed upward earnings estimate revision of 6.9% for the current year, in the last 60 days. Its share price increased 3.8% in the last three months.

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