Ameritrade - AMTD - beats by a penny but cuts full year EPS estimate

Apr.12.05 | About: TD Ameritrade (AMTD)

Ameritrade reported Q1 (its fiscal Q2) EPS of $0.17, a penny above consensus, but effectively lowered its full year EPS guidance. Details:

Q1 (FQ2) Results
(all percentage changes and comparisons are year on year, unless stated otherwise)

  • EPS of $0.17 beat consensus of $0.16 but down from last year's $0.19.
  • Net revenue of $232.5 million down 5.8%.
  • Average commission per trade fell to $13.43 from $13.53, but up from $13.27 in Q4.
  • Daily average transactions 167,200 versus 211,900.
  • Net new accounts 38,000 versus 90,000.
  • Net new accounts in March were 9,000.
  • Average margin debt $3.7 billion versus $3.4 billion.
  • Client assets $75.6 billion versus $71.9 billion.

Full year guidance

  • Now $0.77 to $0.87 per share, versus prior guidance of $0.77 to $0.90 per share.

April trading stats

  • Management indicated that trades per day in April are down 13.6% from March.

Quick comment:

Investors tend to focus on short-term trading results, but from a longer term perspective the outlook for the leading online brokers has clearly shifted. In 2002 and 2003 investors gave up the online brokers for dead, yet they kept adding accounts despite declining trading volume in a weak stock market. When the market rebounded and trading volumes rose the leading companies saw dramatic improvements in leverage and profitability, and their competitive postition was strong as competition had thinned out. But now account growth is slowing (AMTD's fell from 90,000 a year ago to 38,000 now), price competition has heated up, and higher trading volumes mean that more optimism is priced into the stocks.

Full press release here. AMTD chart below.