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Will TD Ameritrade (AMTD) Stock Disappoint in Q2 Earnings?
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TD Ameritrade Holding Corporation (AMTD - Free Report) is scheduled to report second-quarter fiscal 2017 results on Apr 19, before the opening bell.
The Omaha-based investment broker’s first-quarter fiscal 2017 (ended Dec 2016) earnings were in line with the Zacks Consensus Estimate but 5% above the prior-year quarter. Results reflected higher revenues and elevated expenses. Further, the company experienced a persistent decline in net interest margins. However, a rise in average client trades per day was recorded.
Notably, TD Ameritrade delivered a positive earnings surprise in one of the prior four quarters, with an average negative surprise of 1.32%.
TD Ameritrade Holding Corporation Price and EPS Surprise
Shares of the company gained 2.1% over the past six months, underperforming 17.6% growth for the Zacks categorized Financial - Investment Bank industry.
Factors at Play
Expenses to trend high: Expenses are likely to remain high given the company’s ongoing investments in technology and advice and guidance offerings. Further, compliance with Department of Labor's fiduciary rule will increase costs.
Margin pressure lingers: A lingering low interest rate environment has been weighing on TD Ameritrade’s net interest margin (NIM). Though spread-based revenues increased in the recent quarters, the company has been experiencing a shrinking NIM. Nevertheless, the latest rise in the interest rates should alleviate pressure on NIM to some extent.
Uncertainty to trigger revenue growth: Since the U.S. presidential elections, trading activities have grown due to the uncertainties related to policy changes. Further, the company witnessed decent growth in average client trades per day in January and February, indicating higher revenues.
Continued asset growth: The company has been witnessing double-digit asset growth for the last several years. Notably, management targets achieving an increase in net new client assets on an annual rate of 7–11%. With an innovative trading platform, consistent focus on high net-worth clients and enhanced service model to boost engagement and retention, we anticipate TD Ameritrade to exhibit the improving trend in the fiscal second quarter as well.
Earnings Whispers
Our quantitative model doesn’t conclusively point to an earnings beat this time. This is because the company doesn’t have the right combination of the two key ingredients – a positive Earnings ESP and a Zacks Rank #3 (Hold) or better– for increasing its chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks ESP: The Earnings ESP for TD Ameritrade is -2.44%. This is because the Most Accurate Estimate is below the Zacks Consensus Estimate by a penny.
ZacksRank: TD Ameritrade has a Zacks Rank #4 (Sell).
As it is we caution investors against stocks with a Zacks Rank #4 or #5 (Sell-rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.
Activities of TD Ameritrade during the quarter were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for the quarter declined to 41 cents over the last seven days.
Stocks that Warrant a Look
Here are some finance stocks you may want to consider, as according to our model, these have the right combination of elements to post an earnings beat this quarter.
BB&T Corporation has an Earnings ESP of +4.29% and a Zacks Rank #3. It is scheduled to report first-quarter results on Apr 20.
Zion Bancorporation (ZION - Free Report) has an Earnings ESP of +1.85% and a Zacks Rank #3. It is slated to report first-quarter results on Apr 24.
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Will TD Ameritrade (AMTD) Stock Disappoint in Q2 Earnings?
TD Ameritrade Holding Corporation (AMTD - Free Report) is scheduled to report second-quarter fiscal 2017 results on Apr 19, before the opening bell.
The Omaha-based investment broker’s first-quarter fiscal 2017 (ended Dec 2016) earnings were in line with the Zacks Consensus Estimate but 5% above the prior-year quarter. Results reflected higher revenues and elevated expenses. Further, the company experienced a persistent decline in net interest margins. However, a rise in average client trades per day was recorded.
Notably, TD Ameritrade delivered a positive earnings surprise in one of the prior four quarters, with an average negative surprise of 1.32%.
TD Ameritrade Holding Corporation Price and EPS Surprise
TD Ameritrade Holding Corporation Price and EPS Surprise | TD Ameritrade Holding Corporation Quote
Shares of the company gained 2.1% over the past six months, underperforming 17.6% growth for the Zacks categorized Financial - Investment Bank industry.
Factors at Play
Expenses to trend high: Expenses are likely to remain high given the company’s ongoing investments in technology and advice and guidance offerings. Further, compliance with Department of Labor's fiduciary rule will increase costs.
Margin pressure lingers: A lingering low interest rate environment has been weighing on TD Ameritrade’s net interest margin (NIM). Though spread-based revenues increased in the recent quarters, the company has been experiencing a shrinking NIM. Nevertheless, the latest rise in the interest rates should alleviate pressure on NIM to some extent.
Uncertainty to trigger revenue growth: Since the U.S. presidential elections, trading activities have grown due to the uncertainties related to policy changes. Further, the company witnessed decent growth in average client trades per day in January and February, indicating higher revenues.
Continued asset growth: The company has been witnessing double-digit asset growth for the last several years. Notably, management targets achieving an increase in net new client assets on an annual rate of 7–11%. With an innovative trading platform, consistent focus on high net-worth clients and enhanced service model to boost engagement and retention, we anticipate TD Ameritrade to exhibit the improving trend in the fiscal second quarter as well.
Earnings Whispers
Our quantitative model doesn’t conclusively point to an earnings beat this time. This is because the company doesn’t have the right combination of the two key ingredients – a positive Earnings ESP and a Zacks Rank #3 (Hold) or better– for increasing its chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks ESP: The Earnings ESP for TD Ameritrade is -2.44%. This is because the Most Accurate Estimate is below the Zacks Consensus Estimate by a penny.
Zacks Rank: TD Ameritrade has a Zacks Rank #4 (Sell).
As it is we caution investors against stocks with a Zacks Rank #4 or #5 (Sell-rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.
Activities of TD Ameritrade during the quarter were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for the quarter declined to 41 cents over the last seven days.
Stocks that Warrant a Look
Here are some finance stocks you may want to consider, as according to our model, these have the right combination of elements to post an earnings beat this quarter.
Goldman Sachs Group, Inc. (GS - Free Report) is slated to release results on Apr 18. It has an Earnings ESP of +0.37% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
BB&T Corporation has an Earnings ESP of +4.29% and a Zacks Rank #3. It is scheduled to report first-quarter results on Apr 20.
Zion Bancorporation (ZION - Free Report) has an Earnings ESP of +1.85% and a Zacks Rank #3. It is slated to report first-quarter results on Apr 24.
5 Trades Could Profit "Big-League" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure. See these buy recommendations now >>