Updated from 11:25 a.m. EDT

Like competitor E*Trade ( ET), online broker Ameritrade ( AMTD) posted a sharp increase in earnings last quarter and raised the lower end of its guidance for the year.

On a conference call, the company also said that April is shaping up as a solid month so far, with average daily trades of around 200,000. But executives cautioned that trading could slow down over the summer months, as has been the case historically.

"The summertime is normally the slowest time," said Joe Moglia, chief executive at Ameritrade. "The summertime might result in lower activity rates."

Shares of the Omaha, Neb.-based firm fell 79 cents, 5%, to $14.29.

Rich Repetto, an analyst at Sandler O'Neill, said the company is being conservative. "They have no better inside knowledge of where trading is going than anybody else, and if you look back to last July, it was one of the best months of the year," he said.

Chief Financial Officer Randy MacDonald said during the call that Ameritrade is undervalued at current levels. He noted that the stock trades at just 18.9 times forward earnings, even though analysts are calling for annual earnings growth of 15% over the next five years.

In contrast, the S&P 500 is projected to grow earnings by 10.7% per year over the next five years and trades at 17.8 times forward earnings, he said.

"Analysts estimate Ameritrade's earnings per share will be 40% higher than the S&P 500 companies, however Ameritrade only trades at a 6% premium," he said.

Still, Moglia noted that the firm would not buy large blocks of stock from venture capitalists who have been slowly reducing their stake in the company since Ameritrade merged with Datek.

"With the geopolitical risk that exists in the world today and as we enter the summertime -- normally the summertime is a little slower -- I think for us to be able to buy some stock almost every day and be more aggressive at lower points in the market is the best thing for Ameritrade shareholders," he said.

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