The past month has been extremely volatile for the stock markets. The broader market sell-off has wiped out the election rally effect, and the major online brokerage firm – Interactive Brokers Group IBKR – has not been untouched.

In the past month, IBKR shares have crashed 27.4% and underperformed the industry. In contrast, its close peers -- Charles Schwab SCHW and Tradeweb Markets Inc. TW – have fared better.

IBKR One-Month Price Performance
 

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The recent market slump is largely because of the ongoing tariff war, as President Trump’s tariffs have led to retaliation, raising concerns of a full-scale trade war. Also, economic data indicates a slowdown in the U.S. economy, with manufacturing and business activity stalling, job growth weakening and consumer confidence declining. Inflationary pressures are mounting, too, fueled by rising prices in groceries, gasoline and rent, with consumer inflation expectations reaching their highest level since November 2023. These factors resulted in ambiguity and fear in the market, further exacerbating the downturn.

Given the uncertain and volatile backdrop, let’s decipher whether Interactive Brokers is worth adding to your portfolio.

IBKR’s Global Exposure Through Product Diversification

IBKR has been taking several steps to enhance its presence globally. In February, 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.

Interactive Brokers’ 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 driven by higher market participation.

IBKR’s Sales Estimates
 

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Analyst Sentiments Bullish for Interactive Brokers

Over the past month, the Zacks Consensus Estimate for 2025 earnings of $7.46 has been revised almost 1% upward, and the same for 2026 earnings has moved 1% north to $8.11.

Estimate Revision Trend
 

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The projected figures imply a rise of 6.1% and 8.7% for 2025 and 2026, respectively.

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

IBKR Shares are Inexpensive

IBKR shares appear inexpensive relative to the industry. The company is currently trading at the 12-month trailing price-to-tangible book (P/TBV) ratio of 1.11, below the industry’s 2.53. 

Price-to-Tangible Book Ratio (TTM)
 

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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 14.54 and 6.71, 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.

To Buy or Not to Buy Interactive Brokers Stock

Interactive Brokers remains well-positioned for growth amid the current volatile operating environment. Also, rapidly evolving trends will 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. 

Further, positive analyst sentiment adds a layer of optimism. Therefore, IBKR presents an attractive opportunity for value investors, as the stock trades at a discount. 

At present, IBKR carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) 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

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

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