TD Ameritrade (NASDAQ: AMTD): Q2 Earnings Preview 2011

TD Ameritrade Holding Corporation (NASDAQ: AMTD), Canada's second-largest lender, is scheduled to release fiscal second-quarter earnings before the opening bell on Tuesday, January 18, 2011. Analysts, on average, expect the company to report earnings of 28 cents per share on revenue of $702.23 million. In the year-ago period, the company reported earnings of 23 cents per share on revenue of $635.43 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 first quarter, the Omaha, Nebraska based company's net income was  $145.04 million or 25 cents per share, compared with a profit of $136.24 million or 23 cents per share in the year-ago period. Net revenues rose to $656.19 million from $624.62 million in the year-ago quarter. Analysts, on average, expected the company to report earnings of 24 cents per share on revenue of $646.45 million.

TD Ameritrade has continued to grow clients' assets while increasing net new assets, partly by differentiating itself through its discount online business model

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.

The company's stock currently trades at a forward P/E (fye Sep 30, 2012) of 15.79 and PEG ratio (5 yr expected) of 1.68. In terms of stock performance, AMTD shares have gained nearly 9% over the past year.

Full Disclosure: None.

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.

E-Trade Financial Corporation (NASDAQ:ETFC): Q4 Earnings Preview 2009

E-Trade Financial Corporation (NASDAQ:ETFC) is scheduled to release its fourth-quarter financial results after the market close on Wednesday, January 27, 2009. Analysts, on average, currently expect the company to report a net loss of 4 cents a share on revenue of $240.52 million. In the year ago quarter, the company reported a net loss of 50 cents per share on negative revenue of $26.40 million.

E*Trade is a leading online brokerage firm, which also offers retail banking services, such as checking and savings accounts and CD accounts.

E-Trade has been hit hard during the recession and credit crisis as its mortgage business suffered a major blow due to a severe slump in housing sector. The New York-based company has lost $3.49 billion since the third quarter of 2007 from loan defaults and was forced to accept capital injections Citadel Investment Group last year. In October, the company reported a third quarter loss that widened from a year ago, on charge-offs and higher loan loss provision, however, beat analysts' estimate by a penny. The New York-based company reported a net loss for the third quarter of $832 million or $0.66 per share, compared to a loss of $50 million or $0.09 per share in the year-ago quarter. Excluding the impact of the item, the company reported a net loss of $59 million, or $0.05 per share for the third quarter of 2009. Total net revenues for the quarter decreased to $347.22 million from $517.80 million in the prior-year quarter. Analysts, on average, expected the company to report earnings of $0.06 per share on revenue of $202.49 million.

At the end of third quarter, the company had Bank Tier 1 capital ratios of 6.72% to total adjusted assets and 13.15% to risk-weighted assets. The Bank had excess risk-based capital, which is above the level regulators define as well-capitalized, of $985.4 million as of September 30, 2009. At quarter end, E*TRADE reported 4.5 million customer accounts, which included a record 2.7 million brokerage accounts. The average commission per trade increased by $0.45 during the quarter to $11.50.

There now seems to be a consensus that the company has turned the corner. However, return to profitability still remains a big challenge. Last month, E*TRADE said that total special mention delinquencies, 30 days to 89 days delinquencies, declined 3% from September 30 to November 30, while total "at risk" delinquencies, 30 days to 179 days delinquency, declined 2% for the same period. For its home equity portfolio, which represents the company's greatest exposure to loan losses, special mention delinquencies declined by 8% from September 30 to November 30, while total "at risk" delinquencies dipped 5% for the same period. However, the company reported that its total daily average revenue trades for November declined 22% from the same period in 2008 and 13% decline sequentially from October. Still, year-to-date, through November, DARTs are up 6% from the same period last year. E-Trade registered a 22% decline in daily average revenue trades for the month of October compared to the previous year. Total customer assets at the end of October were $142.90 billion, up 19.7% from 119.38 billion last year. Total accounts at the end of October rose 2.2% to 4.50 million from 4.41 million last year. Total gross new accounts, however, decreased 60.1% to 52,407 from the previous year. E*Trade lost 2,569 net accounts in October, compared to a net account growth of 57,191 last year.

In December, ETFC announced that it is restructuring its international business. It also agreed to sell its local market trading operations in Germany and the Nordic region.

The company has been the subject of takeover speculation for most of 2009. According to industry experts, E-Trade is a potential acquisition target for bigger rivals like TD Ameritrade (NASDAQ: AMTD) and Charles Schwab (NASDAQ: SCHW). Shares of the company surged early this month after the Daily Telegraph said the company is in advanced talks about a sale.

In terms of stock performance, E-Trade shares are up 49% over the past year.

Full Disclosure: None.

E-Trade Financial Corp. (NASDAQ:ETFC): Third Quarter Earnings Preview 2009

E-Trade Financial Corporation (NASDAQ:ETFC) will release its third-quarter financial results after the market close on Tuesday, October 27, 2009. Analysts, on average, currently expect the company to report a net loss of 9 cents a share on revenue of $202.49 million. In the year ago quarter, the company reported s net loss of 9 cents per share on revenue of $377.73 million.

E*Trade is a leading online brokerage firm, which also offers retail banking services, such as checking and savings accounts and CD accounts.

E-Trade has been hit hard during the recession and credit crisis as its mortgage business suffered a major blow due to a severe slump in housing sector. In July, the company reported that its second quarter loss widened to $143.24 million or $0.22 per share from $94.56 million or $0.19 per share, in year-ago quarter. Loss from continuing operations for the quarter was $143.24 million or $0.22 per share, compared to $119.44 million or $0.24 per share in the year-earlier quarter. Analysts, on average, expected a loss of $0.31 per share for the quarter. Quarterly results included a provision for loan losses totaling $404.53 million for the quarter, up fro $319.12 million kept apart in the corresponding quarter last year. The Bank had excess risk-based capital, which is above the level regulators define as well-capitalized, of $916 million as of June 30, 2009. Net operating interest income was $339.59 million, compared to $342.76 million in the comparable quarter last year. Total non-interest income increased to $281.32 million from $189.57 million in the prior-year quarter.

Total net charge-offs surged to $386.39 million in the second from $53 million in the prior quarter. At quarter end, E*TRADE reported a record 4.5 million customer accounts, which included a record 2.7 million brokerage accounts.

However, the worst seems to be over for the company and there are improving trends in the firm's business. Last month, company reported strong client trading during August, prompting many analyst upgrades. The New-York based online brokerage firm reported a 37.4% increase in total daily average revenue trades for the month of August. At the end of August, the company recorded brokerage accounts of more than 2.73 million, including gross new brokerage accounts of 31.32 thousand and net new brokerage accounts of 11.32 thousand during the month. The company noted that, at the end of the month, total brokerage accounts were more than 4.52 million.

Customer security holdings for the month declined 17.2% to $107.31 billion from $129.67 billion last year. Brokerage related cash for the month increased by $982 million compared with last year. However, this was offset by a $380 million reduction in bank related customer cash and deposits, as the company continued to execute on its balance sheet reduction strategy. Total customer assets for the month declined 13% to $142.32 billion from the comparable period.

Also in September, the company provided an update concerning delinquencies in its loan portfolio. Special mention delinquencies, which are 30 to 89 days delinquent, for its home equity portfolio, remained flat from June 30 to August 31. Home equity delinquencies, that are 30 to 179 days delinquent, declined 7% from June 30 to August 31. Total special mention delinquencies for the company's loan portfolio, which includes one- to four-family, home equity and consumer and other loans, declined by 4% quarter to date, as of August 31, 2009, , suggesting stabilization in its home-equity-loan business. Further, the company reported quarter-to-date total net revenues of $413 million. Commission, fees and other revenues for the period was $151 million. Operating expense for the period totaled to $188 million.

For the third quarter, the company expects provision for loan losses of $300 million to $375 million and net charge-offs of $350 million to $375 million.

Recent capital actions have also allayed concerns about the financial health of the company. In late August, the company completed a $1.74 billion debt exchange to bolster its capital position as investments related to real estate soured. Last month, Office of Thrift Supervision asked the company to pump another $100 million into its bank to bolster the unit's capital. Subsequently, E-Trade unveiled plans to raise $150 million selling new common stock.

Citadel Investment Group, which twice injected capital into the struggling online brokerage, has both converted part of its huge debt holdings in E*Trade Financial Corp. into stock and cut its stake in the firm to avoid crossing a key regulatory boundary.

According to few industry experts, E-Trade is also a potential acquisition target for bigger rivals like TD Ameritrade (NASDAQ: AMTD) and Charles Schwab (NASDAQ: SCHW).

In terms of stock performance, E-Trade shares are up 20% since the beginning of the year. Shares of the company gained 3 cents or 1.23% to $1.64.

Disclosure: Author doesn’t own any of the stocks discussed here.