We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why TD Ameritrade (AMTD) Should be in Your Portfolio Now
Read MoreHide Full Article
With record earnings, revenues and net new client assets in the first nine months of fiscal 2017, TD Ameritrade Holding Corporation (AMTD - Free Report) appears a solid bet now. The company’s strong trading volumes, client focus and cross-selling opportunities are anticipated to yield positive results for the stock.
Further, the recent interest rate hikes are likely to bring further stability to top-line generation, in turn, creating buying opportunity for long-term horses. Though lack of diversity is visible, as TD Ameritrade’s operations are mainly concentrated in the U.S. and escalating costs might lead to operational inefficiency, sharper focus on organic growth will likely make the growth path smoother for the company.
With net new client assets of about $22 billion as of Jun 30, 2017, TD Ameritrade’s strengths include a sturdy top line and earnings growth, trading activities, as well as steady capital deployment actions.
Why is TD Ameritrade an Attractive Pick
Benefit from Rate Hike: With a rise in rates, brokerage firms are likely to engage in more investment activities. As brokerage firms earn interest income on un-invested cash in customer accounts, this rate rise will allow the brokerage firms to invest at higher rates. As TD Ameritrade currently derives nearly 31% of its total asset-based revenues from net interest income, the company is poised to benefit from the recent rate hikes.
Strong Organic Growth: TD Ameritrade remains a leading asset gatherer, with eight consecutive years of double-digit asset growth, since fiscal 2008, in net new client assets. Notably, during fiscal 2016, the company witnessed an annualized growth rate of 9% in net new client assets, within the long-term target of increasing net new client assets at an annual rate of 7-11%.
Additionally, the company’s net revenue witnessed a 6% compounded annual growth rate (CAGR) over the last five years, ending fiscal 2016. Notably, the increasing trend continued in the first nine months of fiscal 2017 as well. The company’s projected sales growth (F1/F0) of 8.67%, as against the nil industry average, indicates consistent upward momentum in revenues.
Earnings per Share Strength: TD Ameritrade’s earnings per share witnessed a CAGR of 10.5% over the last fiscal five years (2012–2016). Earnings are expected to exhibit an upswing in the near term as the company’s projected EPS growth (F1/F0) is 6.82%.
Strong Trading Activity: TD Ameritrade’s trading volumes have been graphing an uptrend. On a year-over-year basis, the company’s average client trades per day increased 4%, 14% and 8% in fiscal 2013, 2014 and 2015, respectively, benefiting from the volatility in markets. Also, it increased slightly in fiscal 2016, with the improving trend continuing in the first nine months of fiscal 2017.
Strong Leverage: TD Ameritrade’s debt/equity ratio is valued at 0.47 compared to the S&P 500 average of 0.68, indicating relatively lower debt burden. It highlights the financial stability of the company despite an unstable economic environment.
Favorable Zacks Rank: TD Ameritrade currently carries a Zacks Rank #2 (Buy). The bullish rank has been driven by upward earnings estimate revisions over the last 30 days. For fiscal 2017, the Zacks Consensus Estimate moved up 2.4% to $1.69, while for fiscal 2018, it inched up 1% to $2.00.
Steady Capital Deployment: TD Ameritrade remains focused on managing capital levels efficiently. In October 2016, the company declared a 6% hike in its quarterly cash dividend. Notably, during fiscal 2016, the company returned 80% of net income (excluding amortization of intangible assets) through dividends and share repurchases and targets 40% for fiscal 2017. Such capital deployment activities are anticipated to boost investors’ confidence.
Superior Return on Equity (ROE): TD Ameritrade’s ROE of 15.28%, as compared with the industry average of 8.49%, mirrors the company’s commendable position over its peers.
Share Price Movement: TD Ameritrade’s shares have gained nearly 40% in the past year compared with 34.3% growth recorded by the industry it belongs to.
Bottom Line
Organic growth, cross-selling opportunities, solid trading volumes and steady capital deployment activities continue to support TD Ameritrade’s prospects. Also, the recent interest rate hikes and growing net new client assets are estimated to serve as key strengths that will support earnings stability, moving ahead.
Other Stocks to Consider
E*TRADE Financial Corporation has been recording upward estimate revisions for the last 60 days. In addition, the company’s shares have risen nearly 59.9% over the past year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Raymond James Financial, Inc. (RJF - Free Report) has been witnessing upward estimate revisions for the last 60 days. Further, the stock has surged nearly 42.4% in the past year. It currently carries a Zacks Rank #2.
LPL Financial Holdings Inc. (LPLA - Free Report) has been witnessing upward estimate revisions for the last 60 days. Over the past year, the company’s share price has been up more than 64%. It also flaunts a Zacks Rank #1.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Why TD Ameritrade (AMTD) Should be in Your Portfolio Now
With record earnings, revenues and net new client assets in the first nine months of fiscal 2017, TD Ameritrade Holding Corporation (AMTD - Free Report) appears a solid bet now. The company’s strong trading volumes, client focus and cross-selling opportunities are anticipated to yield positive results for the stock.
Further, the recent interest rate hikes are likely to bring further stability to top-line generation, in turn, creating buying opportunity for long-term horses. Though lack of diversity is visible, as TD Ameritrade’s operations are mainly concentrated in the U.S. and escalating costs might lead to operational inefficiency, sharper focus on organic growth will likely make the growth path smoother for the company.
With net new client assets of about $22 billion as of Jun 30, 2017, TD Ameritrade’s strengths include a sturdy top line and earnings growth, trading activities, as well as steady capital deployment actions.
Why is TD Ameritrade an Attractive Pick
Benefit from Rate Hike: With a rise in rates, brokerage firms are likely to engage in more investment activities. As brokerage firms earn interest income on un-invested cash in customer accounts, this rate rise will allow the brokerage firms to invest at higher rates. As TD Ameritrade currently derives nearly 31% of its total asset-based revenues from net interest income, the company is poised to benefit from the recent rate hikes.
Strong Organic Growth: TD Ameritrade remains a leading asset gatherer, with eight consecutive years of double-digit asset growth, since fiscal 2008, in net new client assets. Notably, during fiscal 2016, the company witnessed an annualized growth rate of 9% in net new client assets, within the long-term target of increasing net new client assets at an annual rate of 7-11%.
Additionally, the company’s net revenue witnessed a 6% compounded annual growth rate (CAGR) over the last five years, ending fiscal 2016. Notably, the increasing trend continued in the first nine months of fiscal 2017 as well. The company’s projected sales growth (F1/F0) of 8.67%, as against the nil industry average, indicates consistent upward momentum in revenues.
Earnings per Share Strength: TD Ameritrade’s earnings per share witnessed a CAGR of 10.5% over the last fiscal five years (2012–2016). Earnings are expected to exhibit an upswing in the near term as the company’s projected EPS growth (F1/F0) is 6.82%.
Strong Trading Activity: TD Ameritrade’s trading volumes have been graphing an uptrend. On a year-over-year basis, the company’s average client trades per day increased 4%, 14% and 8% in fiscal 2013, 2014 and 2015, respectively, benefiting from the volatility in markets. Also, it increased slightly in fiscal 2016, with the improving trend continuing in the first nine months of fiscal 2017.
Strong Leverage: TD Ameritrade’s debt/equity ratio is valued at 0.47 compared to the S&P 500 average of 0.68, indicating relatively lower debt burden. It highlights the financial stability of the company despite an unstable economic environment.
Favorable Zacks Rank: TD Ameritrade currently carries a Zacks Rank #2 (Buy). The bullish rank has been driven by upward earnings estimate revisions over the last 30 days. For fiscal 2017, the Zacks Consensus Estimate moved up 2.4% to $1.69, while for fiscal 2018, it inched up 1% to $2.00.
Steady Capital Deployment: TD Ameritrade remains focused on managing capital levels efficiently. In October 2016, the company declared a 6% hike in its quarterly cash dividend. Notably, during fiscal 2016, the company returned 80% of net income (excluding amortization of intangible assets) through dividends and share repurchases and targets 40% for fiscal 2017. Such capital deployment activities are anticipated to boost investors’ confidence.
Superior Return on Equity (ROE): TD Ameritrade’s ROE of 15.28%, as compared with the industry average of 8.49%, mirrors the company’s commendable position over its peers.
Share Price Movement: TD Ameritrade’s shares have gained nearly 40% in the past year compared with 34.3% growth recorded by the industry it belongs to.
Bottom Line
Organic growth, cross-selling opportunities, solid trading volumes and steady capital deployment activities continue to support TD Ameritrade’s prospects. Also, the recent interest rate hikes and growing net new client assets are estimated to serve as key strengths that will support earnings stability, moving ahead.
Other Stocks to Consider
E*TRADE Financial Corporation has been recording upward estimate revisions for the last 60 days. In addition, the company’s shares have risen nearly 59.9% over the past year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Raymond James Financial, Inc. (RJF - Free Report) has been witnessing upward estimate revisions for the last 60 days. Further, the stock has surged nearly 42.4% in the past year. It currently carries a Zacks Rank #2.
LPL Financial Holdings Inc. (LPLA - Free Report) has been witnessing upward estimate revisions for the last 60 days. Over the past year, the company’s share price has been up more than 64%. It also flaunts a Zacks Rank #1.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>