If you follow the investing world a little, you may be aware of Interactive Brokers (IBKR 0.32%) as a good brokerage to consider for yourself. Or you may be aware of it as a stock with a great performance record.
Permit me to show you just how well the stock has performed. I'll compare its average annual return to that of an S&P 500 index fund, the SPDR S&P 500 ETF (NYSEMKT: SPY), to help you appreciate the stock:
|
Time period |
Interactive Brokers |
SPDR S&P 500 ETF |
|---|---|---|
|
Past 3 years |
61.56% |
16.86% |
|
Past 5 years |
38.38% |
15.21% |
|
Past 10 years |
19.87% |
13.70% |
|
Past 15 years |
20.15% |
14.27% |
Data source: Morningstar.com as of Aug. 7, 2025.
If you'd plunked, $1,000 into Interactive Brokers five years ago, it would have grown to $5,075 as of Aug. 7! Note, though, that the past 10 to 15 years have been very strong ones for the overall stock market, with even the S&P 500 posting above-average gains. Over many decades, the S&P 500 has averaged annual returns close to 10%.
Image source: Getty Images.
A more important question than how Interactive Brokers stock has performed in the past is how it might perform in the future. Its future does seem quite promising. For one thing, its profit margins are fat, reflecting an efficient operation and a high degree of automation.
While Interactive Brokers' future seems bright, don't rush to snap up shares without thinking. At recent levels, the stock seems somewhat overvalued. The stock's recent forward-looking price-to-earnings (P/E) ratio -- based on estimates -- of 33 is well above the five-year average of 20, for example, and its price-to-sales ratio of 2.95 is well above the five-year average of 1.85.
It makes sense to add the stock to your watch list, waiting for a lower price, or maybe buy into it gradually over time with small amounts of money invested at regular intervals.
