Interactive Brokers: A Case Study in Margin Expansion and Breakout Potential for IBD Stock Of The Day

The IBD Stock Of The Day strategy has long emphasized identifying securities with strong technical setups and robust fundamentals. In September 2025, Interactive Brokers Group (IBKR) emerged as a prime candidate, showcasing a compelling combination of margin expansion, earnings acceleration, and breakout potential. This analysis examines how IBKR aligns with the criteria for undervalued IBD Stock Of The Day selections, leveraging both quantitative performance and analyst sentiment.

Financial Performance: Earnings and Revenue Surge

Interactive Brokers reported third-quarter 2024 results that underscore its dominance in the global trading ecosystem. Revenue surged 19.2% year-over-year to $1.37 billion, driven by a 31% increase in commission revenue and a 9% rise in net interest incomeWhat is Zacks Research's Forecast for IBKR FY2026 Earnings?^[2]. Daily average revenue trades (DARTs) spiked 42% year-over-year, reflecting heightened client engagementInteractive Brokers, Stock Of The Day, Pops As Key …^[1]. For 2024 as a whole, the company's revenue is projected to more than double compared to 2023, fueled by innovations such as AI-powered news tools and election forecast contractsInteractive Brokers, Stock Of The Day, Pops As Key …^[1].

Earnings growth has been even more striking. Analysts forecast a 18% rise in 2024 earnings, building on a 42% surge in 2023Interactive Brokers, Stock Of The Day, Pops As Key …^[1]. Third-quarter 2024 earnings benefited from a 13% year-over-year increase, with net income reaching $907 millionInteractive Brokers Group Announces 3Q2024 Results^[3]. This performance has translated into a compound annual growth rate (CAGR) of 25% in operating profits since 2020IBKR Operating Profit History & Chart since 2010^[4].

Margin Expansion: A Structural Tailwind

One of IBKR's most compelling attributes is its expanding operating margins. From 51.9% in 2020, the company's operating margin has surged to 85.8% as of September 2025Interactive Brokers Group Announces 3Q2024 Results^[3]. This improvement reflects a combination of cost discipline, scale advantages, and high-margin revenue streams. For instance, net interest income—generated from customer margin loans—accounted for 58% of total revenue in Q3 2024, with a 9% year-over-year increaseInteractive Brokers Group Announces 3Q2024 Results^[3].

The margin expansion is not a one-time event but a sustained trend. Quarterly operating margins have consistently exceeded 70% since early 2024, peaking at 85.8% in September 2025IBKR Operating Profit History & Chart since 2010^[4]. This efficiency has allowed IBKR to maintain profitability even as it invests in technology upgrades, such as enhanced trading platforms and AI-driven analyticsInteractive Brokers, Stock Of The Day, Pops As Key …^[1].

Analyst Sentiment and Breakout Potential

Analysts have upgraded their outlook for IBKR, citing its structural advantages in a fragmented market. Zacks Research raised its FY2026 earnings estimate to $1.94 per share, while Goldman Sachs and Citigroup set price targets of $60.00 and $73.00, respectivelyWhat is Zacks Research's Forecast for IBKR FY2026 Earnings?^[2]. These upgrades reflect confidence in IBKR's ability to sustain margin expansion and capture market share in a low-cost brokerage landscape.

Technically, IBKR's breakout potential is evident. On the day it crossed above its 50-day moving average in late 2024, the stock surged nearly 1%—a classic early entry signal for momentum tradersInteractive Brokers, Stock Of The Day, Pops As Key …^[1]. While some technical indicators, such as the 14-day RSI at 30.6, suggest oversold conditionsIBKR Technical Analysis, RSI and Moving Averages - Investing.com^[5], the broader trend remains bullish. The 50-day moving average currently sits at $62.73, acting as a dynamic support levelWhat is Zacks Research's Forecast for IBKR FY2026 Earnings?^[2].

However, historical data from 2022 to the present reveals that RSI-based oversold signals alone may not guarantee strong risk-adjusted returns. A backtest of buying IBKR when RSI falls below 20 and holding for 30 trading days produced a positive but modest annualized return, with limited trade frequency and significant drawdowns in certain periodsIBKR Technical Analysis, RSI and Moving Averages - Investing.com^[5]. This suggests that while oversold conditions may indicate short-term buying opportunities, combining RSI with trend-following filters—such as ensuring the stock remains above its 200-day moving average—could improve risk management and reduce exposure to volatile reboundsIBKR Technical Analysis, RSI and Moving Averages - Investing.com^[5].

Risks and Considerations

Despite its strengths, IBKR faces headwinds. Analysts project a 10% revenue decline in 2025, driven by market volatility and regulatory pressuresInteractive Brokers, Stock Of The Day, Pops As Key …^[1]. Additionally, technical indicators like the MACD (-0.670) and multiple sell signals from moving averages highlight short-term risksIBKR Technical Analysis, RSI and Moving Averages - Investing.com^[5]. However, these risks appear manageable given the company's strong balance sheet and recurring revenue model.

Conclusion: A Model for IBD Stock Of The Day Candidates

Interactive Brokers exemplifies the ideal IBD Stock Of The Day candidate: a company with expanding margins, accelerating earnings, and a clear breakout pattern. Its ability to leverage technological innovation and global market trends positions it to outperform in both bull and bear markets. For investors seeking undervalued opportunities with strong technical setups, IBKR offers a compelling case study in how margin expansion and strategic execution can drive long-term value.