On Mar 6, 2013, we reiterated our long-term recommendation on
TD Ameritrade Holding Corporation
) at Neutral. This reflects the company's declining expenses and
an increase in total client assets, partially offset by
reductions in average client trades per day and revenue.
TD Ameritrade's fourth-quarter 2012 earnings came in at 27 cents
per share, surpassing the Zacks Consensus Estimate of 24 cents.
Better-than-expected results were primarily driven by a decline
in operating expenses and higher total client assets.
Following the fourth-quarter results, the Zacks Consensus
Estimate for 2013 has gone up 2.8% to $1.09 per share based on 9
out of 16 upward revisions in the past 60 days. Likewise, the
Zacks Consensus Estimate for 2014 has also advanced (up 3.4% to
$1.23 per share). With the Zacks Consensus Estimates for both
2013 and 2014 increasing, the company now has a Zacks Rank #2
The key reason behind TD Ameritrade's stable earnings amid the
ongoing sluggish economic recovery is an improvement in organic
assets, much better than its peers. Further, the company is
comfortably placed to continue benefiting from industry growth in
RIAs and the growing demand for retail investors.
Also, TD Ameritrade's association with TD Bank provides an
opportunity for both firms to cross-sell products. The capital
deployment activities by the company also boost investors'
confidence in the stock.
TD AMERITRADE (AMTD): Free Stock Analysis
BANKUNITED INC (BKU): Free Stock Analysis
FIFTH THIRD BK (FITB): Free Stock Analysis
STATE ST CORP (STT): Free Stock Analysis
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Yet since 2010, TD Ameritrade is facing several headwinds,
including a low interest rate environment, which pressurized
spread and net interest income. Further, regulatory issues,
coupled with lower trading volumes, are the headwinds. Also the
company's non-diverse operations are the causes of concern.
Other Stocks Worth Considering
While we prefer TD Ameritrade, other major stocks in the same
sector, worth a look include
Fifth Third Bancorp
State Street Corporation
). While BankUnited carry a Zacks Rank #1 (Strong Buy), the other
two retain a Rank #2 (Buy).