Ameritrade Sees Strong Growth In Key Metrics With Completion Of Scottrade Acquisition

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AMTD IDEA Group

In continuation with a strong performance across its key metrics in the first three quarters of the year, TD Ameritrade (NASDAQ:AMTD) sustained its growth trend in October. The brokerage’s daily trading volumes grew by nearly 55% year-over-year. Since the company generates over 40% of its revenue from trading commissions, it needs to sustain this growth in order to compensate for the price cuts in commissions announced earlier in the year. However, the acquisition of Scottrade should offer some respite and help in offsetting price competition.

We have a $40 price estimate for Ameritrade’s stock, which is nearly 20% below the current market price.

Interest earning assets, which contribute around 50% of the brokerage’s revenues, grew by over 31% from the previous year’s comparable period. This surge in volumes has likely been driven by both the rate hikes over the past few months and the anticipation of further hikes in the year ahead.

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Ameritrade’s assets under management (AUM) have also continued to grow, and the brokerage’s digital advisory business and focus on newer investment products are likely to drive further AUM growth, and consequently higher investment product fees.

Please refer to our complete analysis for Ameritrade.

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