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TD Ameritrade Holding Corporation (AMTD - Free Report) recorded a positive earnings surprise of 56.9% in first-quarter fiscal 2018 (ending Dec 31). The company reported earnings of 80 cents per share, significantly beating the Zacks Consensus Estimate of 51 cents. Moreover, results were up 86% from the prior-year quarter.
The quarter displayed higher revenues and elevated expenses. Rise in net interest margin (NIM) was also recorded. Notably, the company recorded an increase in average client trades per day, indicating improvement in trading activity.
Including certain non-recurring items, net income for the quarter came in at $297 million or 52 cents per share, compared with $216 million or 41 cents reported in the prior-year quarter.
Rise in Revenues Offset Escalating Expenses
Net revenues for the quarter came in at $1.26 billion, surpassing the Zacks Consensus Estimate of $1.2 billion. Moreover, net revenues surged 46.3% year over year. The rise was chiefly due to higher transaction-based as well as asset-based revenues.
Total asset-based revenues for the quarter amounted to $790 million, up 61.2% year over year, driven by higher insured deposit account fees, as well as investment product fees and net interest revenues.
Commissions and transaction fees climbed 23.9% from the prior-year quarter to $440 million. Further, the quarter's NIM came in at 1.71%, expanding 39 basis points year over year.
Total operating expenses flared up 82% year over year to $921 million. The rise mainly stemmed from rise in a number of expenses, including employee compensation and benefits, professional services, occupancy and equipment costs, and other expenses.
Trading Activity Improved
Average client trades per day for the reported quarter increased 49% year over year to 726,000.
As of Dec 31, 2017, net new client assets totaled $26.5 billion, up 9% year over year. Total client assets came in at $1.2 trillion, up 48% year over year.
Average spread-based balance was $150.7 billion, jumping 28% year over year, and average fee-based investment balance was up 35%, to $230 billion.
Balance Sheet Position
As of Dec 31, 2017, TD Ameritrade’s cash and cash equivalents were $1.6 billion compared with $1.5 billion reported as of Sep 30, 2017. Shareholders’ equity was $7.4 billion compared with $7.2 billion as of Sep 30, 2017.
Outlook
The company updated its outlook for fiscal 2018, which includes projected GAAP earnings of $1.85-$2.45 per share and non-GAAP earnings of $2.55-$3.05 per share. Updated outlook reflects the new U.S. tax legislation.
Our Viewpoint
The company delivered an impressive performance on a significant improvement in trading activities. Furthermore, eased margin pressure in the reported quarter acted as a tailwind. The company recorded a rise in average client trades per day. Also, the Scottrade acquisition and strong investor engagement supported earnings growth.
Though we remain cautious of elevated costs, which are likely to weigh on the company’s financials, TD Ameritrade’s steady capital deployment activities and revenue growth are encouraging.
TD Ameritrade Holding Corporation Price, Consensus and EPS Surprise
Interactive Brokers Group, Inc. (IBKR - Free Report) released fourth-quarter and full-year 2017 results. Adjusted earnings for the quarter came in at 43 cents per share, surpassing the Zacks Consensus Estimate of 39 cents. Also, earnings came in higher than the prior-year quarter figure of 7 cents per share.
The Charles Schwab Corp.’s (SCHW - Free Report) fourth-quarter 2017 adjusted earnings of 44 cents per share surpassed the Zacks Consensus Estimate of 41 cents. Results exclude one-time tax expense of 3 cents per share related to the tax act. Also, earnings increased 22% from the prior-year quarter.
Among others, LPL Financial Holdings Inc. (LPLA - Free Report) is expected to report December quarter numbers on Feb 1.
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TD Ameritrade (AMTD) Q1 Earnings & Revenues Beat Estimates
TD Ameritrade Holding Corporation (AMTD - Free Report) recorded a positive earnings surprise of 56.9% in first-quarter fiscal 2018 (ending Dec 31). The company reported earnings of 80 cents per share, significantly beating the Zacks Consensus Estimate of 51 cents. Moreover, results were up 86% from the prior-year quarter.
The quarter displayed higher revenues and elevated expenses. Rise in net interest margin (NIM) was also recorded. Notably, the company recorded an increase in average client trades per day, indicating improvement in trading activity.
Including certain non-recurring items, net income for the quarter came in at $297 million or 52 cents per share, compared with $216 million or 41 cents reported in the prior-year quarter.
Rise in Revenues Offset Escalating Expenses
Net revenues for the quarter came in at $1.26 billion, surpassing the Zacks Consensus Estimate of $1.2 billion. Moreover, net revenues surged 46.3% year over year. The rise was chiefly due to higher transaction-based as well as asset-based revenues.
Total asset-based revenues for the quarter amounted to $790 million, up 61.2% year over year, driven by higher insured deposit account fees, as well as investment product fees and net interest revenues.
Commissions and transaction fees climbed 23.9% from the prior-year quarter to $440 million. Further, the quarter's NIM came in at 1.71%, expanding 39 basis points year over year.
Total operating expenses flared up 82% year over year to $921 million. The rise mainly stemmed from rise in a number of expenses, including employee compensation and benefits, professional services, occupancy and equipment costs, and other expenses.
Trading Activity Improved
Average client trades per day for the reported quarter increased 49% year over year to 726,000.
As of Dec 31, 2017, net new client assets totaled $26.5 billion, up 9% year over year. Total client assets came in at $1.2 trillion, up 48% year over year.
Average spread-based balance was $150.7 billion, jumping 28% year over year, and average fee-based investment balance was up 35%, to $230 billion.
Balance Sheet Position
As of Dec 31, 2017, TD Ameritrade’s cash and cash equivalents were $1.6 billion compared with $1.5 billion reported as of Sep 30, 2017. Shareholders’ equity was $7.4 billion compared with $7.2 billion as of Sep 30, 2017.
Outlook
The company updated its outlook for fiscal 2018, which includes projected GAAP earnings of $1.85-$2.45 per share and non-GAAP earnings of $2.55-$3.05 per share. Updated outlook reflects the new U.S. tax legislation.
Our Viewpoint
The company delivered an impressive performance on a significant improvement in trading activities. Furthermore, eased margin pressure in the reported quarter acted as a tailwind. The company recorded a rise in average client trades per day. Also, the Scottrade acquisition and strong investor engagement supported earnings growth.
Though we remain cautious of elevated costs, which are likely to weigh on the company’s financials, TD Ameritrade’s steady capital deployment activities and revenue growth are encouraging.
TD Ameritrade Holding Corporation Price, Consensus and EPS Surprise
TD Ameritrade Holding Corporation Price, Consensus and EPS Surprise | TD Ameritrade Holding Corporation Quote
Currently, TD Ameritrade flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Performance of other Investment Brokers
Interactive Brokers Group, Inc. (IBKR - Free Report) released fourth-quarter and full-year 2017 results. Adjusted earnings for the quarter came in at 43 cents per share, surpassing the Zacks Consensus Estimate of 39 cents. Also, earnings came in higher than the prior-year quarter figure of 7 cents per share.
The Charles Schwab Corp.’s (SCHW - Free Report) fourth-quarter 2017 adjusted earnings of 44 cents per share surpassed the Zacks Consensus Estimate of 41 cents. Results exclude one-time tax expense of 3 cents per share related to the tax act. Also, earnings increased 22% from the prior-year quarter.
Among others, LPL Financial Holdings Inc. (LPLA - Free Report) is expected to report December quarter numbers on Feb 1.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>