IBKR — Interactive Brokers Group, Inc.

Sell-side likes the business, the tape does not. Q3 2026 (reported 2026-10-15) delivered $3.19B revenue (+18.1% YoY), $0.69 diluted EPS, 35% account growth to 5.58 million, 27% client-equity growth to $965B, and a dividend hike from $0.0875 to $0.15 — yet the stock fell 1.76% on 2026-10-16, is down 4.95% over three months, and sits below both its 20- and 50-day averages. The analyst mix is a mild Buy at best (0 strong buy / 9 buy / 9 hold / 1 sell; average target $106–108), which tells you the market is weighing the ~32x TTM multiple and rate-cut risk to net interest income (over half of revenue) against genuinely accelerating growth and is not yet willing to pay up.

Revenue has re-accelerated decisively off a 2025 trough. YoY growth by quarter: +15.4% (Q4 2024), +5.1% (Q1 2025), +7.3% (Q2 2025), +12.9% (Q3 2025), +13.5% (Q4 2025), +16.9% (Q1 2026), +19.6% (Q2 2026), +18.1% (Q3 2026) — four straight quarters of acceleration, then a slight step-down in Q3 2026 that is still near the cycle high. Absolute revenue went from $2.10B (Q4 2023) to $3.19B (Q3 2026), up 52%. Diluted EPS stair-stepped from $0.37 (Q4 2023) to $0.69 (Q3 2026), with Q3 2026 up 16.9% YoY versus $0.59. Operating margin is extremely high and essentially flat: 86.9% in Q3 2026 ($2,775M operating income on $3,193M revenue) versus 87.2% a year earlier — no compression despite the growth spend. Two caveats: reported net income ($314M) is small relative to revenue because most profit sits with IBG LLC noncontrolling interests, and quarterly operating cash flow is dominated by customer float, not earnings power ($6.20B in Q2 2026 versus $7.13B in Q2 2025 — a YoY decline in OCF in the same quarter revenue grew 19.6%). This is a real acceleration driven by account growth and net interest income, not a one-quarter blip.

Expensive versus its own history. At $84.52 on 2026-10-16, IBKR trades at 32.1x TTM EPS of $2.602 against a 5-year average P/E of 22.46x — roughly a 43% premium — and the deterministic screen labels it "Rich vs. its own history." P/S of 12.81x versus a 5-year average of 2.05x looks alarming but is unreliable for a broker (customer balances and pass-through items flow through the revenue line). PEG of 1.24 is reasonable against ~24% TTM EPS growth, but not against consensus next-FY EPS growth of just +3.3% (next-FY EPS $2.689 versus $2.602 TTM); on consensus, the forward P/E is still 31.4x. P/B of 1.64x is distorted by the Q3 2026 balance-sheet break (stockholders' equity jumped from $5.90B to $23.25B quarter-over-quarter while long-term debt went from $45.41B to $0). Net: the multiple already discounts continued high-teens growth; it does not discount a stall.

There is a real disconnect between price and estimates. IBKR trades at ~32x TTM EPS and ~31x the consensus next-FY EPS of $2.689, yet consensus models only +3.3% EPS growth — while Q3 2026 alone printed $0.69, an annualized run rate of roughly $2.76 with 35% account growth behind it. Either the consensus is stale (my bias, given four straight quarters of acceleration) or the Street is modeling meaningful NII compression from rate cuts. Practically: if EPS compounds in the low-to-mid teens, the current multiple is supportable and the stock can grind higher as estimates catch up; if EPS growth really lands near 3%, 32x is priced for perfection and multiple compression becomes the entire return story. That asymmetry argues for patience rather than paying full price into an unresolved estimate debate.

Neutral-to-soft, no urgency either way. As of 2026-10-16, RSI(14) stood at 43.93 — not oversold — with price 2.32% below its 20-day (implied ~$86.53) and 4.70% below its 50-day (~$88.69), but still 4.41% above its 200-day (~$80.95). Returns: -2.07% over one week, -0.80% one month, -4.95% three months, +5.31% six months, inside a 52-week range of $58.95–$98.75. Read: a mild pullback within a longer-term uptrend, currently range-bound. The better entries would be a retest of the 200-day near $81 or the high-$70s; a reclaim of the 50-day would confirm the trend has resumed.

• Interest-rate path: net interest income is over half of the top line (Q3 2026 NII $1.15B, +19% YoY). Rate cuts compress the yield earned on customer cash and margin loans, which is the single biggest swing factor in the model.
• Trading volume and volatility: Q3 2026 showed futures volume up 13% YoY but stock shares traded down 24% YoY — commission revenue is cyclical, and DARTs roll over fast in quiet markets.
• Retail brokerage competition: zero-commission platforms (Schwab, Robinhood) compete on price while IBKR differentiates on execution quality, global market access, and interest paid on idle cash; fee pressure is a permanent structural feature.
• Regulation: SEC Section 31 transaction fees and rising global licensing/compliance overhead remain pass-through costs, and any change to order-handling or margin rules would hit the model.
• Secular asset gathering: 35% YoY account growth to 5.58 million and 27% growth in client equity to $965B reflect a durable shift toward self-directed and low-cost global execution.

• Monthly Electronic Brokerage Metrics (typically the first week of each month) — DARTs, client accounts, and client equity are the fastest read on whether the growth engine is still accelerating.
• Federal Reserve policy decisions — cuts pressure NII yield but can stimulate margin borrowing and trading volume; direction matters more than the level.
• IBKR Desktop 1.2, the X (Twitter) Cashtags integration launched mid-September 2026, and ForecastEx event contracts — retail engagement and platform adoption metrics.
• Q4 2026 earnings (date not yet formally scheduled as of 2026-10-16) and any further capital return after the dividend was raised from $0.0875 to $0.15 per quarter.
• Continued international expansion and account growth; any analyst estimate revisions toward the actual EPS run rate would close the gap between consensus and reported results.

• NII concentration: with interest income over half of revenue, a sustained rate-cut cycle compresses the largest and fastest-growing revenue line.
• Valuation: 32.1x TTM EPS versus a 22.46x five-year average leaves no cushion; a growth stall would hit the multiple, not just the earnings.
• Volume cyclicality: a 24% YoY drop in stock shares traded in Q3 2026 shows how quickly the commission side can soften even while NII grows.
• Reporting opacity: the Q3 2026 balance sheet shows stockholders' equity up ~294% quarter-over-quarter and long-term debt falling from $45.41B to $0 — almost certainly a classification/consolidation artifact, but it clouds P/B, leverage, and any trend comparison spanning that date.
• Competitive fee pressure and noncontrolling-interest complexity: the dual IBG LLC structure means reported net income (net margin of just 10.2%) understates the economics, while reported EPS is highly sensitive to the ownership mix.

IBKR is one of the highest-quality brokers in the world — 86.9% operating margin in Q3 2026, 17.5% ROIC, 18.3% ROE, negative accruals (cash generation running ahead of reported profit), 35% account growth to 5.58 million, and 27% growth in client equity to $965B. The problem is price: 32.1x TTM against a 22.46x five-year average, with consensus next-FY EPS growth of only +3.3%, means most of the good news is already paid for — and over half of revenue rides on a rate cycle that is turning against it. Good business, cautious entry: it deserves a premium, just not this much of one until estimates or the price come to it.

Justified forward P/E method: I apply 29x — above IBKR's 22.46x five-year average to credit accelerating revenue growth, 35% account growth and an 87% operating margin, but below the current ~32x TTM given that over half of revenue is rate-sensitive — to my FY2027 EPS estimate of ~$3.00 (the current $0.69 quarterly run rate, annualizing to ~$2.76 for FY2026, plus low-teens growth in FY2027, versus a stale $2.689 consensus). 29 x $3.00 = $87.00, slightly above the $84.52 price on 2026-10-16 and well below the $106–108 analyst consensus, which implies roughly 39x forward EPS.