On Feb 18, Zacks Investment Research upgraded TD Ameritrade Holding Corporation (AMTD) to a Zacks Rank #1 (Strong Buy).
Rationale Behind the Upgrade
TD Ameritrade has been witnessing rising earnings estimates aided by a rise in average client trades per day in January and strong fiscal first-quarter 2014 results. Moreover, this investment broker has delivered positive earnings surprises in the past 4 quarters with an average beat of 6.1%. The long-term expected earnings growth rate for this stock is 20.2%.
In January, client trades per day metrics reached a record high of 496,000 from 405,000 in the prior month and 387,000 in the prior-year period. The improvement in trading and investing business stems from TD Ameritrade’s consistent efforts to deliver enhanced customer services, innovations in online trading, creative as well as cost-effective marketing and sales.
Improving trading activities will continue to support TD Ameritrade’s earnings in the forthcoming quarter. The same was reflected in the fiscal first-quarter 2014 results reported on Jan 21, wherein the company delivered an earning beat driven by top-line growth.
Earnings per share of 35 cents outpaced the Zacks Consensus Estimate of 32 cents. The bottom line was also higher than the year-ago quarter figure of 27 cents.
Average client trades per day increased 24% year over year to 413,743. Moreover, TD Ameritrade reported total client assets worth $596.5 billion, up 24% year over year.
The Zacks Consensus Estimate for fiscal 2014 increased 3.7% to $1.40 per share over the last 30 days. For fiscal 2015, the estimate rose 3.1% to $1.67 over the same time frame.
Other Stocks to Consider
Apart from TD Ameritrade, other investment brokers worth considering include Investment Technology Group Inc. (ITG), LPL Financial Holdings Inc. (LPLA) and E*TRADE Financial Corporation (ETFC). While Investment Technology Group and LPL Financial carry the same Zacks Rank as TD Ameritrade, E*TRADE Financial has a Zacks Rank #2 (Buy).