TD Ameritrade: Rewards Aplenty If Risks Absorbed - Analyst Blog


On Feb 21, 2014, we issued an updated research report on TD Ameritrade Holding Corporation ( AMTD ). The company, which operates in the investment brokerage space, recently reported better-than-expected fourth-quarter 2013 results with increased revenues, partially offset by higher operating expenses. Though the company's strong balance sheet and rising daily average client trades are encouraging, we remain cautious given the macroeconomic headwinds across the industry.

TD Ameritrade posted earnings per share of 35 cents, which beat the Zacks Consensus Estimate of 32 cents. Moreover, the reported figure was higher than 27 cents earned in the year-ago quarter.

With this, the company has delivered earnings surprises in 3 out of the past 4 quarters, while reporting in-line earnings in the remaining quarter.

Net revenue was up 16% year over year to $752.0 million. Additionally, average client trades per day in the quarter increased 24% year over year to 413,743. Further, at the quarter-end, TD Ameritrade reported total client assets worth $596.5 billion, rising 24% year over year.

However, an increase in employee compensation and benefits expenses pushed up total operating expense by 9% year over year to $445.0 million.

Following the results, Zacks Consensus Estimate has been flat over the past 30 days. The Zacks Consensus Estimate for 2014 and 2015 remained unchanged at $1.40 and $1.67, respectively.

Innovation in online trading, long-term investment in products and services, delivery of advanced customer service, creative as well as cost-effective marketing and sales, are TD Ameritrade's key strategies to boost its trading and investing business.

Further, the company's association with The Toronto-Dominion Bank ( TD ) provides an opportunity to cross sell its products. This is expected to be a significant growth driver for TD Ameritrade's organic assets.

Currently, TD Ameritrade carries a Zacks Rank #2 (Buy).

Key Picks in the Investment Brokerage Sector

Other stocks worth considering in the investment brokerage sphere include Investment Technology Group Inc. ( ITG ) and Piper Jaffray Companies ( PJC ). Both these carry a Zacks Rank #1 (Strong Buy).

TD AMERITRADE (AMTD): Free Stock Analysis Report

INVEST TECH-NEW (ITG): Free Stock Analysis Report

PIPER JAFFRAY (PJC): Free Stock Analysis Report

TORONTO DOM BNK (TD): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: AMTD , ITG , PJC , TD

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