TD Ameritrade Stock Lower on Earnings

Shares of TD Ameritrade Holding Corporation (AMTD: Charts, News) closed down -0.13 or -0.79 percent on Tuesday to $16.27 per share after the company announced its net income had dropped by 2.3 percent due to slower trading activity in the third quarter. The company has seen its volume of client trades decline as concerns of a weaker economy and dwindling volume kept traders on the sidelines.

TD Ameritrade's average trading volume so far this month dropped to 319,000 per day, according to CEO Fred Tomczyk in a conference call with analysts. Daily Chart
Omaha, Nebraska based TD Ameritrade Holding Corporation was founded in 1971 and has become a major discount broker through its many acquisitions. One of its more recent takeovers was for, which it bought for over $600 million in 2009, expanding its online presence in the options markets. Ameritrade reported a profit of $153.8 million for the quarter ending on June 30th, or $0.28 per share, versus a profit of $157.4 million or $0.27 per share in the same period one year ago. Revenue declined by three percent to $667.3 million from $684.8 million in the same period last year. According to a poll of analysts surveyed by Thomson Reuters (TRI: Charts, News), the company was expected to earn $0.26 per share on revenue of $661 million. The better than expected bottom line was largely attributed to the company cutting expenses and more assets being deposited by Ameritrade customers. Despite the better than expected per share profit, TD Ameritrade said its commission and transaction fee revenue had declined by -5.5 percent from the second quarter and -9.0 percent from the first. On the conference call to analysts, CEO Tomczyk said that the activity rate, or the amount of client trades divided by funded accounts had dropped to 6.5 percent year to date, its lowest level since 2007. During the conference call, CEO Tomczyk stated that, "As job growth well appears to be slowing, Europe seems to go from crisis to crisis with no permanent solution in place and we're now seeing some slowing in China, in India. We can't predict how any of these issues will be resolved, but if this summer is anything like last summer or the summer before, it will likely take some kind of an event or asked by our leaders to bring investors back into the market." Referring to Ameritrade's growth in customer assets, which increased by nine percent to $9.7 billion, "We continue to execute our game plan and perform to the best of our ability in those areas within our control. In the early aforementioned growth, we continue to gather assets at an industry leading pace." Many analysts forecast Ameritrade's fourth quarter profit to be $0.25 to $0.27 per share, but with an increase in market activity leading up to the 2012 election, TD Ameritrade, along with other online brokers may see business pick up. Other News About AMTD TD Ameritrade Institutional Draws Breakaway Brokers at Record Pace Ameritrade attracts institutional brokers. TD Ameritrade founder's politics upset some Controversy surrounding conservative company founder Joe Ricketts. Other Stocks in the News DirecTV: 'Closer' to agreement with Viacom DTV and Viacom come to an agreement on programming. Facebook Falls as Use on Social Site Drops FB stock continues dropping after report from Capstone Investments. Copyright 2012 by, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc. No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions. We are not responsible for claims made by advertisers and sponsors. Anyone who makes decisions based on what they read here does so at their own risk and cannot hold WebFinance Inc. (DBA, Inc.) or its employees responsible.

Published on Jul 18, 2012
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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