LPL Shares Priced at $30

Nov 18, 2010 9:53 AM, By David A. Geracioti

Would you buy shares in a financial company that trades at about 38times trailing earnings (based on Q3 numbers) and boasts (if that’s the right word) a net profit margin of not even 2 percent? That’s rich. Oh, and none of the proceeds will go to the company, but instead will go to two private equity funds and insiders who are cashing out, but only partially. (The two PE firms will still hold a considerable stake in LPLA, its ticker. The selling shareholders are selling just 15 percent of the company.) On the plus side, the company is growing, advisor CAGR from 2004 to 2009 was 15 percent and EBITA was at a 17 percent CAGR since 2005. The company has $1.4 billion in debt. Shares were priced at $30.

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