IBKR

Interactive Brokers is a genuinely exceptional business. The 10-K describes an automated global broker routing trades across 170+ exchanges in 40 countries with just 3,182 employees, and the numbers show the operating leverage that comes with it: net income climbed from $1.64B (FY2021) to $4.36B (FY2025), up 27.9% YoY, on contract/commission revenue of $2.44B (+23.4% YoY), with diluted EPS of $2.22 (+28.3%) and an 81.2% return on equity. Five straight years of rising net income and a dividend up 45.7% make this a high-quality compounder, not a turnaround story.

Two data caveats matter before reading the valuation. First, the stated 'revenue' of $2.44B is contract revenue (commissions) only and excludes net interest income — IBKR's single largest line — so the derived net margin of 178.6% (net income above revenue) and P/S of 1.7 are artifacts, not meaningful figures; true net revenues are far larger. Second, the 34.08x liabilities/equity ratio looks alarming but reflects customer and segregated assets on a broker-dealer's balance sheet ($203B total assets), not corporate leverage; liquidity is a fortress, with $4.96B cash (+36.6%) and $15.8B operating cash flow. The reported $2.22 EPS reflects the holding-company structure (the public Class A shares hold a minority economic interest), so the P/E of 43.2x is the right multiple to judge the stock — and it is full.