As of June 2, 2025, LPL Financial Holdings Inc's estimated intrinsic value ranges from $191.43 to $452.05 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $452.05 | +16.8% |
| Discounted Cash Flow (5Y) | $362.48 | -6.4% |
| Dividend Discount Model (Multi-Stage) | $244.88 | -36.7% |
| Dividend Discount Model (Stable) | $260.17 | -32.8% |
| Earnings Power Value | $191.43 | -50.6% |
Is LPL Financial Holdings Inc (LPLA) undervalued or overvalued?
With the current market price at $387.16, the stock appears to be moderately overvalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate LPL Financial Holdings Inc's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.9 | 1.14 |
| Cost of equity | 8.0% | 11.2% |
| Cost of debt | 4.9% | 5.5% |
| Tax rate | 24.0% | 24.2% |
| Debt/Equity ratio | 0.18 | 0.18 |
| After-tax WACC | 7.4% | 10.2% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $362 | $32,041M | 79.1% |
| 10-Year Growth | $452 | $39,204M | 65.5% |
| 5-Year EBITDA | $497 | $42,801M | 84.4% |
| 10-Year EBITDA | $555 | $47,444M | 71.5% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $1,569M |
| Discount Rate (WACC) | 10.2% - 7.4% |
| Enterprise Value | $15,436M - $21,283M |
| Net Debt | $3,049M |
| Equity Value | $12,387M - $18,234M |
| Outstanding Shares | 80M |
| Fair Value | $155 - $228 |
| Selected Fair Value | $191.43 |
| Metric | Value |
|---|---|
| Market Capitalization | $30965M |
| Enterprise Value | $34014M |
| Trailing P/E | 28.45 |
| Forward P/E | 25.47 |
| Trailing EV/EBITDA | 16.95 |
| Current Dividend Yield | 28.97% |
| Dividend Growth Rate (5Y) | 3.20% |
| Debt-to-Equity Ratio | 0.18 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $135.62 |
| Discounted Cash Flow (5Y) | 25% | $90.62 |
| Dividend Discount Model (Multi-Stage) | 20% | $48.98 |
| Dividend Discount Model (Stable) | 15% | $39.03 |
| Earnings Power Value | 10% | $19.14 |
| Weighted Average | 100% | $333.38 |
Based on our comprehensive valuation analysis, LPL Financial Holdings Inc's weighted average intrinsic value is $333.38, which is approximately 13.9% below the current market price of $387.16.
Key investment considerations:
Given these factors, we believe LPL Financial Holdings Inc is currently moderately overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.