Brokerages (specially the online model) don’t have hard assets and client’s cash balance is in their trade payables or cash holdings. They also don’t have any receivables because it is a fee business, therefore their working capital requirement is very low.
PE is what Mr Market thinks is right. If you think it is too cheap then go long.
In general brokerages PE hover between 5 to 20. The business is considered cyclical because of retail participation during and after bull phase and slump during bear.
| Subscribe To Our Free Newsletter |
