Ameritrade Reports Record Growth in Asset Base

Ameritrade (NYSE:AMTD) recently announced its performance for the quarter ending March 2011. The company, which reports based on a fiscal year ending September 30th, reported a record increase in client assets. ^[1] Based on the new data, we have updated our price estimate for Ameritrade to $22.71. This new price estimate is a premium of about 5% to market price. Ameritrade allows individual investors to trade equities, options and other securities, but also offers money market account services to clients through TD Bank USA. It competes with other online brokerages and financial services firms like E-Trade (NASDAQ:ETFC), Charles Schwab (NYSE:SCHW), Wells Fargo (NYSE:WFC) and Bank of America (NYSE:BAC).

Results at a Glance

Ameritrade reported record net revenues of $718 million for the quarter. This is 13% higher than the revenues of $635 million for the same quarter a year ago, and signifies a 9% growth over the revenues for the quarter ending December 2010. Net income for the quarter was $172 million, representing an 18% jump over the value for the previous quarter.

The client assets held by Ameritrade reached a record high of $412 billion at the end of this quarter, a 21% increase from their value a year ago. This was driven by the record $11.5 billion net addition to client assets in the quarter.

The increase in the asset held along with a favorable increase in net yields on the deposit accounts led to revenues of $187.5 million from client money market deposit accounts.

The Road Ahead

Ameritrade’s focus on organic growth while ensuring enhanced value for clients has led the company to invest heavily in registered investment advisors (RIAs) in the recent past. We discussed the impact RIAs can potentially have on Ameritrade’s outlook in our article, ‘Can RIAs Provide a Lift for Ameritrade?‘. Also, to cater to the requirements of investors that would like to invest in portfolios that match their risk appetite, Ameritrade also introduced new Amerivest ETF Portfolios – something we discussed in detail as a part of our article titled ‘Amerivest Portfolios Could Attract New Customers, Lift Stock‘.

The fact that the number of average client trades per day has reached the record figure of 439,000 suggests that Ameritrade is concentrating its resources in the right direction.

See our full analysis and $22.71 price estimate for Ameritrade

1. TD Ameritrade delivers record asset gathering, Ameritrade Press Release, April 18 2011 [↩]