Ameritrade Earnings Preview: What We Will Be Watching

TD Ameritrade (NASDAQ: AMTD) is scheduled to announce its fiscal second quarter earnings and host a conference call on April 24. Interest earning assets, which generate about 50% of the company’s revenues, grew nearly 25% in January and February. 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 March as well. We expect over 14% growth in revenues for this segment in 2018, and believe that the fiscal first quarter growth will be along similar lines. You can modify our forecasts for the company in our interactive dashboard to assess their impact on revenues.

Ameritrade’s earnings could be impacted by the company’s decision to slash its commission per trade. 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 80% in comparison to the prior year comparable period, which we believe was driven by acquisition, improvement in U.S. macro conditions, and increased volatility in the stock market. This should more than offset the pressure on trading revenues.