LPLA
LPL Financial Holdings Inc.
Financial Services · Capital Markets · United States · Stock
Score Breakdown
Scored for Dividend Income profile
Sub-scores are 0–20 each; Model Score is weighted by your selected investment goal. How it works →
Why Ranked Here
- Strong revenue growth was offset by declining net income and EPS, producing only a mid-range growth score and limiting overall composite performance.
- Thin margins of 5.1% net and 6.8% operating, combined with elevated leverage and low interest coverage, weighed heavily on profitability and financial health scores.
- The absence of any macro theme assignment means the theme component contributes zero to the total score, further constraining the composite result.
Why Not Higher
- Earnings quality is poor relative to revenue growth — net income fell 18.5% and EPS fell 22.2% in FY2025, and a quarter of negative earnings in 2025Q3 introduced significant volatility that the model penalized.
- Elevated leverage with a debt-to-equity of 1.36 and interest coverage of only 2.8x, combined with no macro theme tailwind, leaves the model with limited factors to reward.
Data Confidence
10 / 10
Very High — full data coverage
Why This Score
Grounded in figures from this company's SEC EDGAR filings — not a restatement of the score itself.
Revenue grew strongly from FY2024 to FY2025, rising from $12,385,107,000 to $16,989,479,000, a gain of +37.2%. However, net income fell from FY2024's $1,058,616,000 to FY2025's $863,024,000 (-18.5%), and diluted EPS declined from $14.03 in FY2024 to $10.92 in FY2025 (-22.2%).
The model rewarded the substantial top-line expansion but penalized the simultaneous contraction in net income and earnings per share, producing a mid-range score that reflects this mixed growth profile.
In FY2025, LPLA posted a net margin of 5.1%, an operating margin of 6.8%, and a return on equity of 16.1%.
The model reflects that while the ROE of 16.1% in FY2025 is respectable, the thin net and operating margins of 5.1% and 6.8% respectively indicate limited bottom-line efficiency relative to revenue, pulling the overall profitability score below the midpoint.
In FY2025, LPLA carried a debt-to-equity ratio of 1.36 and an interest coverage ratio of 2.8, against total assets of $18,492,753,000.
The model penalized the elevated leverage reflected in the FY2025 debt-to-equity ratio of 1.36 and the relatively thin interest coverage of 2.8, which together signal limited financial cushion, resulting in a below-midpoint score despite the company's large asset base.
Quarterly revenue rose from $3,835,025,000 in 2025Q2 to $4,551,977,000 in 2025Q3, $4,932,470,000 in 2025Q4, and $4,938,434,000 in 2026Q1, showing consistent acceleration. Net income and operating income, however, swung sharply negative in 2025Q3 (net income: -$29,517,000; operating income: -$34,111,000) before recovering to $356,404,000 and $484,584,000 respectively in 2026Q1.
The model recognized the steady revenue acceleration across the four quarters but was tempered by the significant earnings disruption in 2025Q3, which introduced volatility into the income trend and limited the overall momentum score.
LPLA's dividend payout ratio in FY2025 was 10.9%, and dividends per share have held at $1.20 since FY2023, following a step-up from $1.00 in FY2022, with no further increase through FY2025.
The model rewarded the consistent, if modest, dividend history and the conservative payout ratio of 10.9% in FY2025, which signals sustainability; however, the flat per-share dividend from FY2023 through FY2025 limited upside in the score.
LPLA is not currently assigned to any of the 24 tracked macro themes.
Because no macro theme assignment exists for this security at this time, the theme component contributes no score under the model's current methodology; this reflects the absence of an assignment rather than any judgment about the company's business.
Research Summary
AI-generated analysis reflects data and conditions as of the report date shown above. Verify any specific figures through primary sources before acting on this analysis.
LPL Financial Holdings (LPLA) delivered exceptional top-line growth of +37.2% in FY2025, with revenue rising from $12.4 billion to $17.0 billion, but this was accompanied by an 18.5% decline in net income and a 22.2% drop in diluted EPS, reflecting a mixed growth profile. Profitability remains constrained, with a net margin of just 5.1% and an operating margin of 6.8%, while leverage is elevated at a debt-to-equity ratio of 1.36 and interest coverage of only 2.8x. Quarterly revenue momentum has been consistent and accelerating, though a sharp swing to negative net income in 2025Q3 introduced meaningful earnings volatility. The dividend is modest and sustainable at a 10.9% payout ratio, but per-share payments have been flat since FY2023, and the absence of any macro theme assignment limits additional model support.
Plain English
LPLA is bringing in a lot more revenue than before, but it's actually making less profit, carrying significant debt, and had one quarter where it lost money — so while the business is growing fast on the surface, the underlying financial picture is more complicated and risky.
Bull Case vs. Bear Case
Bull Case
- Revenue surged +37.2% year-over-year in FY2025, from $12.4 billion to $17.0 billion, demonstrating strong top-line business expansion.
- Quarterly revenue has accelerated consistently across four consecutive quarters, reaching $4.94 billion in 2026Q1, suggesting sustained commercial momentum.
- The dividend payout ratio of 10.9% in FY2025 is conservative, indicating the dividend is well-covered and leaves room for future increases if earnings recover.
Bear Case
- Net income fell 18.5% and diluted EPS dropped 22.2% in FY2025 despite strong revenue growth, signaling that cost pressures or integration expenses are eroding bottom-line returns.
- The debt-to-equity ratio of 1.36 and interest coverage of only 2.8x in FY2025 indicate elevated financial leverage with limited cushion to absorb earnings shocks.
- A sharp swing to negative net income of -$29.5 million and negative operating income of -$34.1 million in 2025Q3 highlights meaningful earnings volatility that undermines confidence in profit stability.
What Could Change the Picture
Bullish Triggers
- A sustained recovery in net income and operating income — building on the 2026Q1 rebound to $356 million and $485 million respectively — combined with margin expansion could signal that the 2025Q3 disruption was transitory.
- If dividends per share are raised above the $1.20 level held since FY2023, it would signal management confidence in earnings durability and could improve the dividend outlook.
Bearish Triggers
- If net margins remain near 5.1% or deteriorate further despite continued revenue growth, it would confirm that scale is not translating into profitability improvement.
- A further increase in the debt-to-equity ratio beyond 1.36 or a decline in interest coverage below 2.8x would heighten financial health concerns and increase downside risk.
Red Flags
- ONE_TIME_REVIEW: 2025 OCF/NI ratio = -0.48 (OCF=-411,404,000, NI=863,024,000) — possible large one-time item
Risk Profile
High RiskLPLA carries a debt-to-equity ratio of 1.36 and an interest coverage ratio of just 2.8x in FY2025, indicating limited financial cushion if earnings come under pressure. This concern is reinforced by the sharp swing to negative net income of -$29.5 million and negative operating income of -$34.1 million in 2025Q3, demonstrating that earnings can deteriorate rapidly within a single quarter.
This report is for educational and research purposes only. It does not constitute financial, investment, legal, or tax advice — always conduct your own due diligence before making investment decisions.