As you might know, TD Ameritrade Holding Corporation (NASDAQ:AMTD) recently reported its full-year numbers. The result was positive overall - although revenues of US$5.9b were in line with what analysts predicted, TD Ameritrade Holding surprised by delivering a profit of US$3.96 per share, modestly greater than expected. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest forecasts to see whether analysts have changed their mind on TD Ameritrade Holding after the latest results.
Following the recent earnings report, the consensus from15 analysts covering TD Ameritrade Holding expects revenues of US$5.04b in 2020, implying a chunky 14% decline in sales compared to the last 12 months. Earnings per share are expected to dive 29% to US$2.82 in the same period. In the lead-up to this report, analysts had been modelling revenues of US$5.05b and earnings per share (EPS) of US$2.66 in 2020. Analysts seem to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target was unchanged at US$39.50, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values TD Ameritrade Holding at US$52.00 per share, while the most bearish prices it at US$28.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. These estimates imply that sales are expected to slow, with a forecast revenue decline of 14% a significant reduction from annual growth of 15% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 3.7% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - analysts also expect TD Ameritrade Holding to grow slower than the wider market.
The Bottom Line
The most important thing to take away from this is that analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards TD Ameritrade Holding following these results. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on TD Ameritrade Holding. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple TD Ameritrade Holding analysts - going out to 2024, and you can see them free on our platform here.
We also provide an overview of the TD Ameritrade Holding Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.