Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

TD Ameritrade Holding Corp. (AMTD - Analyst Report) reported fiscal third-quarter 2013 (ended Jun 30, 2013) earnings of 33 cents per share, beating the Zacks Consensus Estimate of 31 cents. The results also surpassed the prior-year quarter figure by a nickel.

Better-than-expected results came on the back of higher revenues. Further, an increase in both total client assets and daily average client trades were the positives. However, a rise in expenses was a headwind.

TD Ameritrade’s net income for the said quarter was $184 million, up 19% from $154 million in the prior-year quarter.

Quarter in Detail

Net revenue rose 9% year over year to $725 million. This was due to an increase in total asset-based revenue, net interest revenue and transaction-based revenues. Further, net revenue exceeded the Zacks Consensus Estimate of $701.0 million.

Average client trades per day increased 12% year over year to 399,216. Net new client assets were $10.8 billion, up 11% from $9.7 billion in the past year.

At the end of the quarter, TD Ameritrade reported total client assets worth $523.5 billion, up 18% year over year. Moreover, average spread-based balance was $84.7 billion, up 14% from $74.2 billion in the prior-year quarter. Average fee-based balance was $118.1 billion, up 34% year over year.

Net interest revenue was $120.0 million, up 2% year over year.

Operating income climbed 17% year over year to $298 million. The rise was due to increased revenues, partly offset by a rise in expenses. Net interest margin (NIM) was 1.49%, down 24 basis points from 1.73% in the prior-year quarter.

Total operating expense shot 3% year over year to $427.0 million. The rise was mainly due to an increase in clearing and execution costs, occupancy and equipment costs, advertising expenses as well as depreciation and amortization expenses.

Balance Sheet

As of Jun 30, 2013, TD Ameritrade’s leverage ratio was 0.8, compared with 1.1 as of Jun 30, 2012. Cash and cash equivalents were $1.0 billion, compared with $0.9 billion as of Jun 30, 2012.

Capital Deployment Update

Along with the earnings release, TD Ameritrade declared a quarterly dividend of 9 cents per share on its common stock. The dividend will be paid on Aug 15, 2013 to shareholders of record as of Aug 1.

Other Developments

On Jul 1, 2013, KCG Holdings, Inc. (KCG) closed its merger with GETCO Holding Company LLC. Consequently, TD Ameritrade expects to record a pre-tax gain on its investment in KCG Holdings of approximately $54 million or $0.06 per share. The company will record this gain in the fourth fiscal quarter, ending Sep 30, 2013.

Our Viewpoint

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 the key factors behind TD Ameritrade’s strategy of boosting its trading and investing business.

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

Amid a volatile operating environment, TD Ameritrade witnessed a rise in both organic client assets and trading volumes, which will benefit the company. However, a low interest rate environment and stringent regulations will likely be dampeners.

TD Ameritrade currently carries a Zacks Rank #3 (Hold). Among other companies in the financial sector, E*TRADE Financial Corporation (ETFC - Analyst Report) will announce second-quarter results on Jul 24.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%