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TD Ameritrade Upped to Strong Buy

Zacks Equity Research

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).

Read the Full Research Report on ETFC
Read the Full Research Report on AMTD
Read the Full Research Report on ITG
Read the Full Research Report on LPLA

Zacks Investment Research