) reported fiscal fourth-quarter 2013 (ended Sep 30) earnings of
36 cents per share, beating the Zacks Consensus Estimate by a
penny. The results also surpassed the prior-year quarter figure
of 26 cents.
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For fiscal 2013, earnings came in at $1.22 per share, beating the
Zacks Consensus Estimate of $1.20. Additionally, earnings were
above $1.06 per share earned in the prior year.
Better-than-expected results came on the back of increased
revenues. Further, rise in both total client assets and daily
average client trades were the positives. However, higher
expenses were a headwind.
TD Ameritrade's net income for the said quarter was $200 million,
up 40% from the prior-year quarter. For fiscal 2013, net income
was $675 million, up 15% year over year.
Quarter in Detail
Net revenue rose 10% year over year to $709 million. This was due
to increase in total asset-based revenue and transaction-based
revenues. However, net revenue was below the Zacks Consensus
Estimate of $714.0 million.
For fiscal 2013, net revenue was $2.8 billion, up 5% year over
year. Net revenue was in line with the Zacks Consensus Estimate
of $2.8 billion.
Average client trades per day in the quarter increased 16% year
over year to 381,657. Net new client assets were $10.1 billion,
stable from the past year.
At the quarter-end, TD Ameritrade reported total client assets
worth $555.9 billion, up 18% year over year. Moreover, average
spread-based balance was $88.8 billion, up 17% from $76.2 billion
in the prior-year quarter. Average fee-based balance was $122.3
billion, up 31% year over year.
Net interest revenue was $119.0 million, up 3% year over year.
Operating income increased 20% year over year to $279 million.
The rise was due to increased revenues, partly offset by a rise
in expenses. Net interest margin (NIM) was 1.41%, down 25 basis
points from 1.66% in the prior-year quarter.
Total operating expense rose 4% year over year to $430.0 million.
This was mainly due to increase in employee compensation and
benefits expenses, clearing and execution costs, occupancy and
equipment costs as well as depreciation and amortization
As of Sep 30, 2013, TD Ameritrade's cash and cash equivalents
were $1.1 billion, compared with $0.9 billion as of Sep 30, 2012.
Shareholders' equity was $4.7 billion compared with $4.4 billion
as of Sep 30, 2012.
Capital Deployment Update
Along with the earnings release, TD Ameritrade declared a 33%
increase in its quarterly dividend to 12 cents per share. The
dividend will be paid on Nov 19, 2013 to shareholders of record
as of Nov 9.
Additionally, the company declared a special cash dividend of 50
cents per share. This will be paid on Dec 17, 2013 to
shareholders of record as of Dec 3. This is the second time the
company has declared a special dividend in a fiscal year.
Outlook for Fiscal 2014
The company has also released an updated outlook for fiscal 2014.
It expects earnings per share to be $1.20-$1.40 for the fiscal
year 2014. Additionally, average client trades per day are
predicted to be in the range of 365,000 to 425,000.
Further, the company expects net revenue to be in the range of
$2,790 million to $3,175 million. Additionally, operating
expenses are forecasted to be in the band of $1,710 million to
$1, 875 million
Performance of Competitors
Among other investment brokers,
) third-quarter 2013 earnings beat the Zacks Consensus Estimate,
while results at
Interactive Brokers Group, Inc.
) came in line with the Zacks Consensus Estimate.
Innovations in online trading, long-term investment in products
and services, delivery of advanced customer service, creative as
well as cost-effective marketing and sales, along with prudent
expense management are TD Ameritrade's key strategies to boost
its trading and investing business.
Further, 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
rise in both organic client assets and trading volumes, which
bode well going forward. However, a low interest rate environment
and stringent regulations pose as challenges.
At present, TD Ameritrade carries a Zacks Rank #2 (Buy).