Initiated 2026-09-28 (re-initiation; prior report 2026-09-25 archived) · Price $312.87 (as of 2026-09-28 12:06 ET, stockanalysis.com) · Mkt cap $24.64bn · Financials / wealth management platforms · Model: verified

Rating: Buy — Conviction: Low

LPL keeps winning independent advisors (organic NNA 6.4% annualized in August) while absorbing Commonwealth. At 12.9x TTM EBITDA the base case sits about a fifth above the price, and the bull case is roughly twice as far above as the bear case is below. The worry that growth consumes all the cash has eased: H1 2026 operating cash flow was +$692mm. The call is fragile: most of the upside comes from the exit-multiple method, and a 1pp higher discount rate turns it into a Hold.

Conviction tests (3a-v-c): T1 fail — Buy → Hold at +1pp (base +7.5%) · T2 fail — Gordon method alone +6%, reads Hold · T3 pass · T4 pass

Model value range vs price
Bear $136.44Base $380.02Bull $631.60Price $312.87

Business overview

LPL provides brokerage, custody, technology and compliance to independent advisors, RIAs and bank programmes, with $2.60tn of client assets at August 2026 (60.8% advisory). Revenue was $16.99bn in FY2025 and $10.13bn in H1 2026 (+34.9%), reported gross: advisor payout took $11.2bn of FY2025 revenue. EBITDA was $2.18bn in FY2025. Three variables drive earnings:

Competition

LPL competes for advisors against Raymond James, the wirehouses, Osaic and the RIA custodians (Schwab, Fidelity). Pressure shows up first in transition-assistance packages, not client pricing, so the advisor-loan line is the thing to watch.

Bull case

  1. Flows compound. Recruited assets were $24.9bn in Q2 and organic NNA reached 6.4% annualized in August. Plays out if the move to independence continues and markets hold. Model: rev_growth
  2. Commonwealth synergies land. The run-rate EBITDA estimate is $435mm and the 2026 core G&A outlook is $2,140–2,165mm. H1 2026 EBITDA margin was 15.4%, against 12.8% for FY2025. Plays out if the Q4 conversion keeps ~90% of assets. Model: ebitda_margin
  3. Cash conversion turns. H1 2026 operating cash flow was +$692mm (FY2025: −$411mm); advisor-loan outlays of $503mm were close to H1 2025's $450mm while revenue grew 35%. Plays out if loans grow slower than revenue after Commonwealth retention packages. Model: nwc_pct_rev
  4. The multiple holds. At 12.9x TTM EBITDA, a stable multiple on growing EBITDA is enough. Plays out if the market stops pricing LPL only on rate cuts. Model: exit_ev_ebitda

Bear case

  1. Cuts hit the sweep. 100bp lower yields on ~$52bn of sweep balances would cost roughly $0.5bn of near-pure-margin revenue (est.), and $4.7bn of cash has left since Q1. Plays out if the Fed cuts and cash keeps sorting out. Model: ebitda_margin
  2. Market beta. Most revenue is asset-based, so a bear market cuts fees within a quarter or two. Plays out in a 20%+ equity drawdown. Model: rev_growth
  3. Growth eats the cash. Advisor loans rose from 13.4% to 21.8% of revenue from FY2022 to FY2025, and FY2025 free cash flow was −$982mm. Plays out if recruiting competition keeps transition packages rich. Model: nwc_pct_rev
  4. Leverage and a trough multiple. Debt is $7.5bn (3.24x FY2025 EBITDA, model basis). If bear drivers 1 and 2 coincide, LPL could trade at trough-broker multiples. Model: exit_ev_ebitda

Valuation & balance sheet

Metric (definition) Current Own history (range or 5y avg) Peers Source, as-of
Forward P/E (consensus adjusted EPS) 13.8x n/a (unverified) Raymond James 11.6x · Ameriprise 10.1x · Schwab 13.7x stockanalysis.com, 2026-09-28
EV/EBITDA, model basis (EV $32.11bn: market cap on diluted shares − corporate cash + debt; no leases) 14.7x FY2025 · 12.9x TTM EBITDA margin FY2021–FY2025 12.1–19.8% n/a (peers show no EBITDA on this source) model-inputs.json; 10-K, Q2 release
FCF yield (operating cash flow − capex, over market cap) −3.7% TTM (−$931mm); H1 2026 +$327mm FY2023 +$109mm · FY2024 −$285mm · FY2025 −$982mm n/a (unverified) FY2025 10-K, Q2 2026 10-Q

Model-implied value range (from model-summary.json; generic module, Gordon-growth DCF and exit-EV/EBITDA DCF, midpoints): Bear $136.44 · Base $380.02 · Bull $631.60 per share, i.e. implied returns of −56.4% / +21.5% / +101.9% vs $312.87. These ranges show how the bull and bear drivers translate into value; they are not price targets. The price sits about 72% of the way from the bear case to the base case, so the market is pricing some chance that rate cuts and cash sorting cap earnings.

Re-rating. The base exit multiple of 12.0x is a de-rating: 18% below 14.7x FY2025 and 7% below 12.9x TTM on the same basis. The methods disagree by 30% (exit $429.31, Gordon $330.73). Gordon's terminal value is roughly 8x year-5 EBITDA (est.), so the exit method embeds a multiple ~4 turns higher and carries most of the base upside.

Tail, quantified (outside the committed model): revenue +15%, −8%, −2%, +3%, +4%; margin 14% falling to 11%; NWC 24% of revenue; 8x exit; 10% WACC; 2% terminal growth. It gives $59.27 (−81%).

Balance sheet:

Model note: tier full, status built, verification verified (3,207 formula cells matched in LibreOffice). Unverified inputs: none. Assumptions without basis: none. Scenario consistency is OK on all 14 rows. Other notes:

Relative value vs peers
MetricLPLARJFAMPSCHWPeer medianvs median
P/E (TTM)26.1x13.8x12.1x17.6x13.8x+89%
P/E (forward)14.5x11.5x10.2x13.4x11.5x+26%
PEG0.6x0.6x0.8x0.6x0.6x−5%
P/B4.5x2.4x6.9x3.8x3.8x+18%
Dividend yield0.4%1.4%1.4%1.3%1.4%−1.0pp
FCF yield-3.6%4.7%18.3%6.4%6.4%−10.1pp
P/E (TTM)LPLA26.1xSCHW17.6xRJF13.8xAMP12.1x
P/E (forward)LPLA14.5xSCHW13.4xRJF11.5xAMP10.2x
PEGAMP0.8xSCHW0.6xRJF0.6xLPLA0.6x
P/BAMP6.9xLPLA4.5xSCHW3.8xRJF2.4x
Dividend yieldRJF1.4%AMP1.4%SCHW1.3%LPLA0.4%
FCF yieldAMP18.3%SCHW6.4%RJF4.7%LPLA-3.6%

As of 2026-10-09. One source and one definition for every company: aggregator TTM and consensus-forward multiples, lease-inclusive EV. Not the model's own EV basis (see the report's valuation table). Quotes taken 11:40-11:58 ET on 2026-10-09 with the market open, so multiples reflect intraday prices. Dashed line = peer median. Source: stockanalysis.com /stocks/<ticker>/statistics/, fetched 2026-10-09.

Notes. EV/EBITDA is not available on the source for LPL or any of its peers, so it is omitted. FCF yield for brokers and wealth platforms is distorted by client-cash and sweep-balance flows; compare it with care.

Scenario stress test

Reasoned from the bull/bear drivers above. The model column comes from the scenario overlays (Base case + shock).

Scenario Effect Mechanism Magnitude Model Δ value vs Base ($/sh)
S1 Fast equity crash − Asset-based fees reset lower with client assets; de-rating Med −$58.99
S2 Slow bear / recession − Lower asset values plus Fed cuts on sweep yields. Well under Base − Bear on purpose: transitory, whereas the bear case is multi-year rate and fee compression High −$95.65
S3 Rapid rate shock − Higher sweep yields help margin, but asset values fall and the discount rate rises; net negative High −$65.66
S4 Slow rate grind ± Sweep-yield gain roughly offsets a higher discount rate Low −$5.49
S5 Soft-landing cuts ± Cuts take sweep margin, but asset values rise and the discount rate falls; the model nets positive High +$63.89
S6 Recession-driven cuts − Worst mix: falling asset values and falling sweep yields together High −$62.43
S7a Credit liquidity shock − Asset marks fall and financials de-rate; no near-term funding need Med −$40.25
S7b Slow default cycle − Credit-heavy client portfolios mark down; mild de-rating Med −$32.86
S8 Stagflation − Real asset values fall over three years and the discount rate rises; high sweep yields cushion margin High −$72.38
S9a Dollar spike 0 No material effect, not modeled — domestic business — $0.00
S9b Dollar slide 0 No material effect, not modeled — as S9a — $0.00
S10 Melt-up + Client assets and advisory fees rise with markets Med +$41.46
S11 Energy supply shock − Equity drawdown lowers the fee base Low −$18.29
S12 Mega-cap/AI derating − Advisory accounts are heavy in mega-cap equities; a leadership unwind lowers the fee base Low −$25.20

Currently active/on watch per the playbook:

Model value change vs Base, by scenario
S2 Slow bear / recession−$95.65S8 Stagflation−$72.38S3 Rapid rate shock−$65.66S6 Recession-driven cuts−$62.43S1 Fast equity crash−$58.99S7a Credit liquidity shock−$40.25S7b Slow default cycle−$32.86S12 Mega-cap/AI derating−$25.20S11 Energy supply shock−$18.29S4 Slow rate grind−$5.49S9a Dollar spike$0.00S9b Dollar slide$0.00S10 Melt-up+$41.46S5 Soft-landing cuts+$63.89

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