Interactive Brokers (NASDAQ:IBKR) finished September with 5.576 million client accounts, 35% more than a year earlier. In the same month, daily average revenue trades rose just 6% from the prior year. Daily average revenue trades, or DARTs, are the company’s count of customer orders per trading day. In the second quarter of 2026, that figure had jumped 36%.
That gap is the story right now. Interactive Brokers runs a heavily automated brokerage. Active traders, hedge funds, advisors, and everyday investors use it to trade stocks, options, futures, and currencies across more than 170 markets from a single account. It makes money in two ways: commissions on trades and interest earned on client cash and margin loans, an operating model so efficient that Interactive Brokers (IBKR) turns every revenue dollar into 77 cents of pretax profit. Yet, despite its industry-leading profitability and expanding customer base, the automated broker doesn’t make the cut among the 10 Best Undervalued Stocks to Buy in October. With third-quarter results due later this week, the question is whether a customer base that keeps growing can justify a valuation that already assumes it will. The answer depends less on how busy clients are than on how much money they bring.
Cheap Trades, Deep Pockets
The company’s edge is cost, and it publishes the receipts. Over the past 12 months, IBKR Pro clients paid an all-in average of 2.5 basis points (hundredths of a percentage point) to trade a U.S. stock, by the company’s own measure. That efficiency flows straight to the bottom line. Pretax profit margin reached 77% in the second quarter, up from 75% a year earlier.
Low costs attract serious money. Client equity hit $964.7 billion at the end of September, and the average US stock trade that month was $23,713. That creates a starkly different profile from retail platforms expanding into high-risk prediction markets, as seen when Robinhood (HOOD) grew event contracts over 10x while raising questions about whether its valuation premium can absorb the legal risks.
Interest Carries the Load
Second-quarter results showed both revenue engines running hot. Commission revenue rose 30% to $673 million. Net interest income climbed 23% to $1.06 billion, and diluted EPS reached $0.69, up from $0.51 a year earlier.
The interest line tells the more important story. Net interest margin slipped to 1.93% from 2.07% as yields on loans and client cash fell. Net interest income still grew because the balances underneath it grew so much. Customer margin loans jumped 67% to $108.5 billion, and customer credits (client cash) rose 27% to $182.4 billion.
September’s monthly figures suggest that balance-sheet growth is holding up. Ending margin loans were $105.2 billion, 36% higher than a year before, and client credit balances reached $186.2 billion. That cushion is what separates Interactive Brokers from brokers that lean on trading volume.
What If Traders Go Quiet?
If you want to know what a cooler market looks like for this business, September offers a preview. DARTs of 4.111 million were 4% lower than in August, and year-over-year growth has slowed sharply from the second quarter’s pace. Fewer trades point to softer commission revenue. A broad selloff could squeeze trading volumes, margin borrowing, and client equity all at once.
The stock has been rewarded for a boom in risk-taking, and some of that boom is fading. The balance sheet is the counterweight. Client equity held about even with August, margin loans rose 4% month over month, and the account count kept climbing. A slower trading tape dents one engine without stalling the other, showing how Interactive Brokers (IBKR) turns every revenue dollar into 77 cents of pretax profit. But if trading volumes keep cooling into 2027, interest income will have to do more of the work.
A Premium to Its Own Past
At 32.56 times forward earnings, as of October 9, Interactive Brokers trades well above its five-year average of 22.37 and far above the sector’s 10.83. Put simply, investors are paying more than $32 for every $1 of expected earnings.
Part of that premium is earned. Analysts expect EPS to grow 20.64% in 2027, and that growth comes with a 77% pretax margin. A sector-level multiple would make little sense for a business growing its accounts 35% a year. Investors sizing up that gap often look at larger, more diversified brokerage rivals for comparison.
The harder question is the gap with the stock’s own history. The five-year average already covers years of strong growth. Today’s multiple asks investors to believe the next stretch will be at least as good, just as trading activity cools. Expected EPS growth of 20.64% is strong, but at this multiple the stock leaves little room for a soft quarter.
Hedge fund interest has climbed, with 87 funds holding the stock in the most recent quarter, up from 70 in the prior one. Short interest sits at 3.17% of float, a sign of relatively limited bearish positioning.
Platform Strong, Price Full
The evidence says the business is earning its growth: accounts, client cash, and margin loans are still rising even as trading cools. What looks stretched is the price, not the platform. At more than 32 times forward earnings, the stock suits long-term investors who believe account growth near today’s pace can last for years and who can handle swings tied to market moods. A third-quarter report showing interest income offsetting softer commissions would support that view. A stall in account growth or margin loans would make the premium much harder to defend.
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