Monday, January 17, 2011

TD Ameritrade (NASDAQ: AMTD): Q1 Earnings Preview 2011

TD Ameritrade Holding Corporation (NASDAQ: AMTD), Canada's second-largest lender, is scheduled to release fiscal first-quarter earnings before the opening bell on Tuesday, January 18, 2011. Analysts, on average, expect the company to report earnings of 24 cents per share on revenue of $646.45 million. In the year-ago period, the company reported earnings of 23 cents per share on revenue of $624.62 million.

TD AMERITRADE Holding Corporation, through its subsidiaries, provides securities brokerage services and technology-based financial services in the United States. AMTD operates two principal business units: a Private Client division and an Institutional Client division. 

In the preceding fiscal fourth quarter, the Omaha, Nebraska based company's net income was $113.96 million, or $0.20 per share, compared to $156.74 million, or $0.26 per share, in the same period a year ago. Net revenues declined to $608.84 million from $657.93 million in the year-ago quarter. Analysts, on average, expected the company to report earnings of $0.23 per share on revenues of $619.17 million. 

At its last earnings call in October, the company said that it expects fiscal 2011 earnings in a range of $0.90 to $1.20 per share and operating margin in the range of 36% to 41%. The company anticipates a funded account activity rate of 6.6% to 7.3%, which equates to 335,000 to 410,000 trades per day which represents a plus or minus 10% from its 2010 actual trading activity. The company expects 7% to 11% net new asset growth, which translates to $24 billion to $38 billion of net new assets. The company is on track to complete the thinkorswim integration in its second fiscal quarter. The company is also planning further enhancements to its mobile offering, including a new application for the iPad and will roll out  three tier trading platform, which includes both web and software-based applications to better serve the range of sophistication amongst its clients.

TD Ameritrade's traditional revenue base comes from the transaction-based fees it charges to clients for brokerage and clearing services. This business model has been successful for online brokers because operating costs remain low in the online brokerage industry. TD Ameritrade also generates revenue from the cash in its clients' accounts, by lending out this money to other clients through margin accounts, and to third-party borrowers through affiliate banks.

TD is the sixth largest bank in North America by branches and serves about 19 million customers in four key businesses. TD has been looking for acquisitions having an asset value of less than $10 billion. It has also been increasing its U.S. foothold in recent years and owns about 40% of online brokerage services provider TD Ameritrade Holding Corp.

Last month, the company agreed to acquire auto lender Chrysler Financial for about $6.3 billion in cash. TD expects the acquisition to close in the second quarter of its fiscal 2011. The transaction is expected to be neutral to adjusted earnings in 2011. In 2012, the first full year of operations, the acquisition is expected to add about $100 million in adjusted earnings.

In December, the company also announced that its November daily client trades rose 6% from a year earlier--snapping a streak of declines--and was up 8% from October 2010.

In terms of stock performance, AMTD shares have gained nearly 3% over the past year.

Full Disclosure: None.
Related Posts with Thumbnails

Wikinvest Wire