• Some investors may be wondering if Interactive Brokers Group stock still offers value after its strong run, or if most of the opportunity is already priced in.
• The share price closed at US$80.46, with returns of 5.0% over 7 days, 18.5% over 30 days, 19.7% year to date and 78.2% over the last year, so recent performance is clearly part of the valuation question.
• Recent news has often focused on the company’s role as a large listed electronic broker, which keeps attention on trading volumes, client activity and the broader appeal of low cost platforms. This context helps explain why investors are watching the stock closely as markets assess how sustainable current activity levels might be.
• Interactive Brokers Group scores 3 out of 6 on Simply Wall St’s valuation checks, as shown in its valuation score. The rest of this article will compare standard valuation approaches and then finish with a way to look at value that goes beyond a single model.

Approach 1: Interactive Brokers Group Excess Returns Analysis

The Excess Returns model looks at how much profit a company is expected to earn above the return that equity investors require, then capitalises those “extra” earnings into an intrinsic value per share.

For Interactive Brokers Group, the starting point is book value of $12.54 per share and a stable earnings figure of $7.79 per share, based on the median return on equity from the past 5 years. The cost of equity is estimated at $3.26 per share, which implies an excess return of $4.53 per share. That excess is what this model treats as value created over and above the required return.

The model also assumes an average return on equity of 19.85% and a stable book value of $39.22 per share, drawn from weighted future book value estimates from 2 analysts. Feeding these inputs into the Excess Returns framework gives an intrinsic value estimate of about $131.54 per share.

Compared with the recent share price of $80.46, this points to an implied discount of about 38.8%, which indicates the stock screens as undervalued on this method.

Result: UNDERVALUED

Our Excess Returns analysis suggests Interactive Brokers Group is undervalued by 38.8%. Track this in your watchlist or portfolio, or discover 51 more high quality undervalued stocks.

Approach 2: Interactive Brokers Group Price vs Earnings

For a profitable company like Interactive Brokers Group, the P/E ratio is a straightforward way to connect what you pay for each share with the earnings that support it. It helps you see how much the market is willing to pay today for each dollar of current earnings.

What counts as a "normal" or "fair" P/E depends on how investors view the company’s growth outlook and risk profile. Higher expected growth or perceived resilience can justify a higher P/E, while greater uncertainty or lower expected growth usually points to a lower multiple.

Interactive Brokers Group currently trades on a P/E of 34.54x. That sits below the Capital Markets industry average P/E of 42.43x, but above the peer average of 21.59x. Simply Wall St’s Fair Ratio for the stock is 20.79x. This is a tailored P/E level based on factors such as earnings characteristics, industry, profit margins, market cap and company specific risks. Because the Fair Ratio incorporates these elements directly, it gives a more tailored reference point than a simple comparison with broad industry or peer averages.

Comparing the current P/E of 34.54x with the Fair Ratio of 20.79x suggests the shares are trading at a richer valuation than this framework implies.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Interactive Brokers Group Narrative

Earlier it was mentioned that there is an even better way to understand valuation. Narratives on Simply Wall St let you attach your view of Interactive Brokers Group’s story to concrete numbers by linking your assumptions for revenue, earnings, margins and Fair Value to a forecast, then comparing that Fair Value with the current price. Because Narratives on the Community page update automatically when fresh data like earnings or news appears, you can see, for example, one investor building a more cautious story around a Fair Value of about US$58.09 while another leans into a more optimistic case closer to US$85.00. This can help you decide how your own view lines up with the market without needing to build complex models yourself.

For Interactive Brokers Group, here are previews of two leading Interactive Brokers Group Narratives to make comparison easier:

Fair Value in this narrative: US$85.00

Implied discount to this Fair Value: about 5.3% based on the recent price of US$80.46

Revenue growth assumption: 8.40% per year

• Focuses on continued global account growth and higher client balances as key supports for commissions and net interest income.
• Assumes ongoing interest in options, equity trading and digital assets as clients use more complex products on a low cost, automated platform.
• Builds in a higher P/E multiple and margin expansion, with analysts in this camp expecting stronger earnings and a premium valuation by 2028.

Fair Value in this narrative: US$15.08

Implied premium to this Fair Value: about 433.5% based on the recent price of US$80.46

Revenue growth assumption: 6.28% per year

• Highlights that very high pre tax margins and current profitability may not be permanent if costs and competition change.
• Points to interest rate sensitivity and trading volumes as key swing factors for commissions and net interest income.
• Flags competitive and regulatory risks, including pressure from low cost brokers, new trading platforms and changes in market structure.

These two Narratives present clear, data backed bookends for what different investors currently believe about Interactive Brokers Group. You can use them to consider where your own view sits, whether between these perspectives or outside them.

Do you think there's more to the story for Interactive Brokers Group? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.