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TD Ameritrade Holding Corporation Message Board

  • boyce43 boyce43 Jul 5, 2007 9:12 AM Flag

    What is value on sell or merger?

    Thanks in advance!


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    • We have to look at future earnings and compare AMTD to its peers to value the company.AMTD and ETFC have 2008 forward earnings of 1.27 and 1.91 respectively.Assuming share prices of 22.76 and 20.9 for ETFC and AMTD respectively ,ETFC and AMTD have 2008 forward P/E of 11.9 and 16.45 respectively.The AMTD forward 2008 P/E of 16.45 is much higher than that for ETFC of 11.9.Assuming a more moderate 2008 forward P/E of 14 for AMTD the stock value would be 17.78 (1.27 X 14).This values AMTD at 17.78,consequently,there is not much premium to the stock price in the 20-21 range if the AMTD is sold or merges.

      • 1 Reply to princejosy
      • That's not entirely the correct way to value the "merged" company. The value of merging the two companies is the expense synergy savings, which would have an immediate bottom line increase to EPS. If you read through the slide show presentation from the Hedge Funds, they do a pretty good job of projecting the future earnings of a combined ETFC and AMTD. There would only be (1) technology department (1) marketing budget, etc. The marketing dollars alone are over $200m per year for each of the companies. The cost savings of only having one advertising budget would be 15+ cents EPS. Therefore, if the two companies merged, their future P/E value taking into account expense synergy savings would probably be below 10. Therefore, you would see a positive movement in both stock prices if a merger was announced because investors would be looking at the projected EPS value of the two combined companies.

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