The Future Looks Really Bright for TD Ameritrade Holding Corp. Stock

The quarterly AMTD stock numbers were a standout

Schwab's Q1 Numbers Validate Pre-Earnings Bullishness on AMTD Stock

Source: Rich via Flickr

Yet again TD Ameritrade Holding Corp. (NASDAQ:AMTD) posted strong quarterly results. But the response from Wall Street was muted. So far in today’s trading, AMTD stock is up about 1.7%.

Then again, leading up the earnings report, there was a nice bullish move. For 2018, AMTD stock is up an impressive 10%.

OK then, so let’s take a look at the quarter. Net revenues surged by 63% to $1.3 billion and the adjusted earnings came to 80 cents a share. The Street, on the other hand, was looking for $1.2 billion in revenues and 52 cents on the bottom line.

Because of the positive impact of the new tax law, AMTD stock has an updated outlook. For fiscal 2018, the company expects GAAP earnings to range from $1.85 to $2.45 per share.

So digging into the numbers, it should be no surprise that AMTD has been running on all cylinders. No doubt, the roaring bull market is key. Although, the AMTD stock earnings release mentioned other interesting factors, such as the intense interest in blockchain and cannabis-related securities.

In the quarter, the client trades per day came to 726,000, up 49% on a year-over-year basis. There was also a 9% increase in new client assets to $26.5 billion. There are currently $1.2 trillion under management, which is up 48%.

There’s something else to keep in mind about the AMTD growth story: the $4 billion acquisition of Scottrade. Announced in October 2016, the deal has definitely been a big-time winner. AMTD picked up a top-notch brand, a strong customer base and an extensive branch network.

There was also strong synergies, such as with the weeding out of duplications. All in all, the deal has turned out to be highly accretive.

Now, as for the latest quarter, there were other notable announcements to consider:

  • Global Trading: AMTD has setup a platform that allows investors to participate in US markets on a 24-hour basis for 5 days of the week, which involves select ETFs. According to executive vice president Steve Quirk: “Market-moving news frequently breaks overnight. During events like Brexit or the U.S. election, futures were the only product available to investors looking to reposition their portfolios as the markets moved after hours. Investors today expect the same on-demand access and convenience they’re used to with other online services. Technology has enabled many other industries, like retail for example, to allow people do their consumer research and act on it at the same time. We want to bring investing into the same realm.”
  • Model Market Center: This is a platform for registered investment advisors (RIAs) to provide flexibility. That is, an RIA can do their own research and execute trades or instead rely on third-party asset managers for their client needs.
  • Secondary Offering: AMTD issued 27.6 million shares to the public. The reason was to provide liquidity for the founder of Scottrade. Goldman Sachs Group Inc (NYSE:GS) was the advisor on the deal.

Bottom Line on AMTD Stock

Even with the run-up in AMTD stock, the valuation is still reasonable. The forward price-to-earnings multiple is 17X, which is in-line with other peers. Charles Schwab Corp (NYSE:SCHW) trades at 19X and E*TRADE Financial Corp (NASDAQ:ETFC) is at 18X.

It’s also important to note that the integration of Scottrade has yet to finish. In other words, there is likely to be continued momentum from the deal.

Tom Taulli is the author of High-Profit IPO StrategiesAll About Commodities and All About Short SellingFollow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

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