Ameritrade Earnings Preview: What We Will Be Watching

TD Ameritrade (NASDAQ: AMTD) is scheduled to announce its fiscal first quarter earnings and host a conference call on January 23. Interest earning assets, which generate about 50% of the company’s revenues, grew nearly 30% in October and November. The rate hikes over the past year, driven by improvements in U.S. GDP and employment rates, led to a massive surge in assets. We believe the growth momentum spilled over into December as well. We expect over 20% growth in revenues for this segment in 2017, and believe that the fiscal first quarter growth will be along similar lines.

Ameritrade’s earnings could be impacted by the company’s decision to slash its commission per trade in February 2016. Following price cuts by rivals such as Charles Schwab and Fidelity in order to stay competitive with zero-commission brokerages, the company slashed its commission per trade from $9.99 to $6.95. Since Ameritrade generates over 40% of its revenue from trading commissions, we expect some pressure on trading revenues. However, the brokerage’s trading volumes for the first 2 months of the fiscal first quarter grew by over 47% in comparison to the prior year comparable period, which we believe was driven by improvement in U.S. macro conditions and increased volatility in the stock market. This should partially offset the pressure on trading revenues.

See our complete analysis for Ameritrade.

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Please refer to our complete analysis for Ameritrade.

View Interactive Institutional Research (Powered by Trefis):
Global Large Cap | U.S. Mid & Small Cap | European Large & Mid Cap
More Trefis Research