Ameritrade Earnings Preview: What We Will Be Watching

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AMTD IDEA Group

TD Ameritrade (NASDAQ: AMTD) is scheduled to announce second-quarter fiscal 2017 earnings on Wednesday, April 19. The earnings could be impacted by the company’s decision to slash its commission per trade from $9.99 to $6.95, following the price cuts by rivals such as Charles Schwab and Fidelity. Ameritrade generates over 40% of its revenue from trading commissions. Moreover, the brokerage’s trading volumes for the first 2 months of the quarter remained low in comparison to the prior year. However, much of this can be attributed to a tough year-on-year comparison due to the volatility seen in the global economy at the beginning of 2016, which was driven by uncertainty around oil prices, a slowdown in China and slow GDP growth in the U.S. at the time.

 

Interest earning assets, which generate about 45% of the company’s revenues, grew nearly 13% in the quarter-to-date period ending February. The rate hike in December 2016 led to a massive surge in assets. We believe the growth momentum spilled over into March as well, due to the Fed’s 25 basis point rate hike announcement. We expect over 20% growth in revenues for this segment in 2017, and believe that the first quarter growth will be along similar lines.

See our complete analysis for Ameritrade.

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