) recently announced its performance for the quarter ending March
2011. The company, which reports based on a fiscal year ending
September 30th, reported a record increase in client assets. Based
on the new data, we have updated our
price estimate for Ameritrade to $22.71
. This new price estimate is a premium of about 5% to market price.
Ameritrade allows individual investors to trade equities, options
and other securities, but also offers money market account services
to clients through TD Bank USA. It competes with other online
brokerages and financial services firms like E-Trade (
), Charles Schwab (
) and Bank of America (
Results at a Glance
Ameritrade reported record net revenues of $718 million for the
quarter. This is 13% higher than the revenues of $635 million for
the same quarter a year ago, and signifies a 9% growth over the
revenues for the quarter ending December 2010. Net income for the
quarter was $172 million, representing an 18% jump over the value
for the previous quarter.
The client assets held by Ameritrade reached a record high of
$412 billion at the end of this quarter, a 21% increase from their
value a year ago. This was driven by the record $11.5 billion net
addition to client assets in the quarter.
The increase in the asset held along with a favorable increase
in net yields on the deposit accounts led to revenues of $187.5
million from client money market deposit accounts.
The Road Ahead
Ameritrade's focus on organic growth while ensuring enhanced
value for clients has led the company to invest heavily in
registered investment advisors (RIAs) in the recent past. We
discussed the impact RIAs can potentially have on Ameritrade's
outlook in our article, '
Can RIAs Provide a Lift for Ameritrade?
'. Also, to cater to the requirements of investors that would like
to invest in portfolios that match their risk appetite, Ameritrade
also introduced new Amerivest ETF Portfolios - something we
discussed in detail as a part of our article titled 'Amerivest
Portfolios Could Attract New Customers, Lift Stock'.
The fact that the number of average client trades per day has
reached the record figure of 439,000 suggests that Ameritrade
is concentrating its resources in the right direction.
See our full analysis and $22.71 price estimate for