TD Ameritrade (AMTD) Falls Despite Record Quarterly Revenue

NEW YORK (TheStreet) -- TD Ameritrade  (AMTD) dipped Wednesday despite record revenue in the discount broker's second-quarter earnings report.

The largest U.S. discount broker reported a 34.7% year-over-year increase in profit to $194 million, thanks largely to net new client assets of $12.2 billion, an 8% annualized growth rate. Profit equated to 35 cents a share, a 35% year-over-year increase and in line with estimates of analysts polled by Thomson Reuters I/B/E/S

TD Ameritrade also posted record revenue of $812 million, a 19.6% year-over-year increase. Furthermore, the broker had a record in average client trades per day of approximately 492,000 for an activity rate of 8.1%. 

The stock was down 1.89% to $32.22 at 11:24 a.m. on Wednesday.

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Separately, TheStreet Ratings team rates TD AMERITRADE HOLDING CORP as a "buy" with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate TD AMERITRADE HOLDING CORP (AMTD) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, expanding profit margins, impressive record of earnings per share growth and compelling growth in net income. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 7.3%. Since the same quarter one year prior, revenues rose by 15.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Capital Markets industry and the overall market, TD AMERITRADE HOLDING CORP's return on equity exceeds that of both the industry average and the S&P 500.
  • TD AMERITRADE HOLDING CORP has improved earnings per share by 29.6% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, TD AMERITRADE HOLDING CORP increased its bottom line by earning $1.22 versus $1.06 in the prior year. This year, the market expects an improvement in earnings ($1.44 versus $1.22).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the Capital Markets industry average, but is less than that of the S&P 500. The net income increased by 30.6% when compared to the same quarter one year prior, rising from $147.00 million to $192.00 million.
  • 47.01% is the gross profit margin for TD AMERITRADE HOLDING CORP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 25.49% is above that of the industry average.
  • You can view the full analysis from the report here: AMTD Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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