LPL Financial Holdings Inc. LPLA shares touched a new all-time high of $384.04 during Friday’s trading session on higher total brokerage and advisory assets in January 2025. Total brokerage and advisory assets were $1.81 trillion, increasing 4.1% from the prior month and 33% year over year.

Over the past three months, LPLA stock has risen 14.5%, outperforming the industry, the Zacks Finance sector, and the S&P 500 index. Also, LPLA stock has performed better than its peers — The Charles Schwab Corporation SCHW and Tradeweb Markets Inc. TW.

Three-Month Price Performance

Image Source: Zacks Investment Research

Does LPLA stock have more upside left despite hitting an all-time high? Let’s try to decipher that.

Factors Supporting LPL Financial Stock

Favorable Policies & Rate Cuts to Aid Revenues: In January, Donald Trump began his second Presidential term. The new administration’s favorable stance toward businesses is likely to drive investor confidence, thus increasing market participation and liquidity. This will boost LPLA’s revenues across the mix and client engagement. Moreover, anticipated corporate tax cuts will likely enhance profitability.

Additionally, the Federal Reserve has reduced interest rates by 100 basis points (bps) since September 2024. This, along with future rate cuts, will support LPL Financial’s advisory and brokerage assets, as well as transaction-based revenues. Also, higher profitability for the firms in general will lead to higher valuations, thus boosting equity markets further and aiding transaction and fee-based revenues. The metric has witnessed a CAGR of 9.3% over the last five years ending 2024.

The company’s recruiting efforts, strategic acquisitions and solid advisor productivity are expected to keep supporting revenues. LPL Financial’s total revenues witnessed a compound annual growth rate (CAGR) of 16.1% over the last five years (2019-2024).

Revenue Growth Trend

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for sales implies growth of 20.5% and 11.6% for 2025 and 2026, respectively.

Strategic Acquisitions: LPL Financial has been pursuing opportunistic acquisitions to support its revenue growth and expand footprint globally. In October 2024, the company acquired Atria Wealth Solutions to bolster its offerings in the wealth management solutions market, while, in May, it acquired the wealth management business of Crown Capital.

Further, in September 2024, LPLA agreed to acquire The Investment Center, Inc., a broker-dealer and registered investment advisor. In 2023, the company bought a minority stake in IAA (a hybrid registered investment advisory firm) and acquired FRGIS and the Private Client Group business of Boenning & Scattergood.

A strong balance sheet enables LPLA to pursue strategic buyouts to expand its presence, diversify its revenues and enhance new capabilities.

Solid Balance Sheet Position: As of Dec. 31, 2024, LPL Financial’s net corporate debt and other borrowings were $5.49 billion, while cash and cash equivalents (including cash segregated under federal or other regulations) were $2.56 billion.

Given a solid balance sheet position, the company’s capital distribution activities remain encouraging. In February 2023, LPLA hiked its quarterly dividend by 20 to 30 cents per share.

The company has hiked its dividend once in the last five years with an annualized dividend growth rate of 5.4%.

Dividend Yield

Image Source: Zacks Investment Research

Similarly, SCHW has increased its dividends four times over the past five years, while TW has hiked its dividends thrice over the same time frame.

Moreover, LPL Financial has a share repurchase plan in place, which it had halted until the acquisition of Altria Wealth Solutions. As of Dec. 31, 2024, roughly $730 million worth of authorization remained available. Management expects to repurchase about $100 million worth of shares in the first quarter of 2025.

Near-Term Hurdles for LPL Financial Stock

Huge Dependence on Commission-Based Revenues: LPL Financial’s excessive reliance on commission-based revenues (constituting 26.7% of total revenues in 2024) is a concern. The company’s commission revenues increased in 2021, declined in 2022 and then increased in 2023 and 2024. As revenues depend on the capital markets' performance, which is cyclical in nature, they are likely to remain volatile if a market slowdown occurs.

Rising Expense Base: The persistent rise in expenses is another concern. The company’s operating expenses witnessed a CAGR of 16.4% over the last five years (2019-2024). The expenses are likely to stay elevated going forward on account of rising headcount, strategic acquisitions and technological investments.

Expense Growth Trend

Image Source: Zacks Investment Research

Analyst Sentiments on LPLA Stock

Over the past month, the Zacks Consensus Estimate for 2025 earnings of $19.35 has moved marginally downward, while the same for 2026 earnings of $23.34 per share moved 1.1% north.

Estimate Revision Trend

Image Source: Zacks Investment Research

The projected figures imply a rise of 17.2% and 20.6% for 2025 and 2026, respectively.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Parting Thoughts on LPL Financial

Interest rate cuts, strategic buyouts and a solid balance sheet are likely to support LPLA’s financials. However, rising expenses and significant reliance on commission-based revenues are concerns.

Nonetheless, despite these challenges a favorable stance for businesses from the Trump administration will likely aid the company’s profitability. Also, analysts are bullish on the company’s prospects.

Thus, LPLA stock remains a lucrative bet for investors at the moment. LPLA currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

The Charles Schwab Corporation (SCHW) : Free Stock Analysis Report

Tradeweb Markets Inc. (TW) : Free Stock Analysis Report

LPL Financial Holdings Inc. (LPLA) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research