) fiscal third-quarter 2014 earnings of 34 cents per came in line
with the Zacks Consensus Estimate. However, the reported figure
came a penny above the prior-year quarter earnings.
Results reflected increased revenues. Further, the quarter
continued to witness a rise in both total client assets and daily
average client trades. However, higher expenses were on the
TD Ameritrade's net income for the quarter was $190 million, up
3.3% from the prior-year quarter.
Td Ameritrade Holding Corporation - Earnings
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Quarter in Detail
Net revenue came in at $763 million, surpassing the Zacks
Consensus Estimate of $758 million. Further, net revenue was up
5.2% year over year. The rise reflected an increase in asset-based
revenues, partially offset by a decline in transaction based
Operating income increased 6.0% from the prior-year quarter to
$316 million. The rise was due to increased revenues, partly offset
by higher expenses. Net interest margin (NIM) was 1.52%, increasing
3 basis points (bps) from the prior-year quarter.
Total operating expense rose 4.7% year over year to $447
million. The increase was mainly due to a rise in employee
compensation and benefits expenses, clearing and execution costs,
and professional services expenses.
Average client trades per day in the quarter increased nearly 1%
year over year to 401,468. Further, as of Jun 30, 2014, net new
client assets stood at $13.4 billion, up 24.1% from the prior-year
At the quarter end, TD Ameritrade reported total client assets
of $650.2 billion, up 24.2% year over year. Moreover, average
spread-based balance was $91.2 billion, up 7.7% year over year,
while average fee-based investment balance increased 17.3% to
Net interest revenue was $149 million, up 24.2% year over
As of Jun 30, 2014, TD Ameritrade's cash and cash equivalents
were $1.3 billion, compared with $1.1 billion as of Sep 30, 2013.
Shareholders' equity was $4.7 billion, in line with the figure as
of Sep 30, 2013.
Share Repurchase Update
During the quarter, TD Ameritrade repurchased 2.9 million shares
of its common stock for around $89 million at an average price of
$30.48 per share.
Innovations in online trading, long-term investment in products
and services, delivery of advanced customer service and creative
marketing and sales are TD Ameritrade's key strategies to boost its
trading and investing business. Further, we believe the company
will benefit from the renewed interest of retail investors in the
Additionally, the company's association with
The Toronto-Dominion Bank
) provides an opportunity to cross-sell its products. This is
expected to be a significant growth driver for TD Ameritrade's
Amid a volatile operating environment, TD Ameritrade witnessed a
continuous rise in both organic client assets and trading volumes,
which bode well going forward. However, we remain cautious as a
continuous rise in expenses, a low interest rate environment and
stringent regulations may weigh on the company's financials in the
At present, TD Ameritrade carries a Zacks Rank #4 (Sell).
Performance of Other Investment Brokers
Interactive Brokers Group, Inc.
) second-quarter 2014 adjusted earnings per share of 26 cents
missed the Zacks Consensus Estimate of 29 cents. However, the
reported figure was up from 21 cents earned in the year-ago
Robust top-line growth drove
) second-quarter earnings of 23 cents per share, surpassing the
Zacks Consensus Estimate of 22 cents. Also, this was up 28% from 18
cents earned in the year-ago quarter.
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