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Bear of the Day: TD Ameritrade Holding (AMTD)

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While hopes were high for the brokerage segment thanks to rising rates, some companies have disappointed in this market to kick off earnings season. A great example of this is TD Ameritrade (AMTD - Free Report) which just reported and missed earnings estimates.

The company reported EPS of 40 cents per share compared to estimates of 41 cents per share, marking the second miss in three quarters for the online brokerage giant. But while this sluggish report was largely overlooked by investors, there could be some issues on the horizon for AMTD, at least if we look to recent earnings estimates.

AMTD Estimates

In just the past week, we have seen three estimates go lower for the current quarter earnings on AMTD stock, while we have seen four estimates go lower for the current year. And for both of these key time periods it really continues a longer trend of decline, as both consensus estimates are now lower by over 5.5% compared to where they were sixty days ago.

Part of this is due to the lower prospects of higher interest rates, while another aspect has to be the reduced income from trading fees. Investors saw the opening salvos of a price war take place in the first quarter of this year, and this could definitely hit the bottom line of TD Ameritrade in the near term, and especially if interest rates don’t cooperate.



AMTD Fundamentals

But beyond earnings, AMTD also struggles from a fundamental look too. The stock receives ‘F’ Grades for Value and Growth, and is the bottom of the barrel for both of these important metrics.

As for value, the company receives its weak grade thanks to a P/CF ratio that is nearly 10 times higher than the industry average, as well as a P/B ratio that is more than double the industry average. And from a growth look, cash flow growth is less than half of the industry average while the projected EPS growth comes in at just 5.15%. Add in an ‘F’ Grade on the momentum front too, and it is hard to like this security from a fundamental perspective.

Bottom Line & Other Picks

With these kind of figures, it shouldn’t be surprising that AMTD has an ‘F’ for its VGM Score, while it also has a Zacks Rank #5 (Strong Sell). As such, investors may want to look elsewhere in the financial sector for profits.

Fortunately, the brokerage space still has a strong rank so there are plenty of other choices in the industry. One that could be worth watching right now is BGC Partners (BGCP - Free Report) , as this stock has a Zacks Rank #1 (Strong Buy), and a VGM Score of ‘B’ as well.

So, if you are looking for a better choice in this market, it might be a good idea to give BGCP a closer look over AMTD, at least until TD Ameritrade can turn things around on the estimate and fundamental fronts.

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