Interactive Brokers

Methodology

Interactive Brokers' electronic brokerage platform generates highly predictable earnings from interest income on customer cash balances plus trading commissions. The company's low-cost technology-driven model creates exceptional operating leverage. This calculation works well given the recurring nature of interest income, though earnings sensitivity to short-term interest rates creates volatility when Fed policy changes dramatically.

Methodology

Interactive Brokers typically shows moderate PEG ratios reflecting steady customer growth and interest rate sensitivity. The company's sophisticated trading platform attracts active traders and institutional clients. Compare to other online brokers to assess whether Interactive Brokers' low-cost model and global reach justify valuations relative to competitors with different customer segments and revenue mixes.

Methodology

Interactive Brokers pays a minimal dividend as management prioritizes reinvestment in technology platforms and global expansion. The company's exceptional profitability generates substantial excess capital primarily used for share buybacks. Total return combines modest dividends with earnings growth from customer acquisition and expanding wallet share with active traders seeking professional-grade tools.