Shares of TD Ameritrade Holding Corporation (AMTD) soared to a new 52-week high of $31.10 at the beginning of the trading session on Jan 6. However, the stock closed the session at $30.57, which reflects a solid return of 75.2% over the past one year. The trading volume for the session was 2.0 million shares.
Despite the strong price appreciation, this Zacks Rank #3 (Hold) investment broker still has upside left, given an almost stable estimate over the last 60 days and expected long-term earnings growth of 18.3%.
Growth Drivers
TD Ameritrade’s impressive performance was driven by an improvement in average client trades per day for Nov 2013 and strong fiscal fourth-quarter 2013 results, which comprised a positive earnings surprise of 5.9%.
For November, average client trades per day was 416,000, up 22.0% from 341,000 in the prior-year period. Innovative product offerings, advanced customer services, online trading platform and prudent expense management continue to boost TD Ameritrade’s trading and investment business.
On Oct 31, TD Ameritrade declared fiscal fourth-quarter earnings of 36 cents per share, which beat the Zacks Consensus Estimate by 2 cents. Better-than-expected results were aided by top-line growth, partially offset by higher expenses.
Moreover, TD Ameritrade delivered positive earnings surprises in the trailing 4 quarters with an average beat of 8.3%.
TD Ameritrade’s efficient capital deployment activities, wherein it returned 75% of its earnings to stockholders, are commendable. Along with fiscal fourth-quarter 2013 earnings release, the company declared a 33% increase in its quarterly dividend to 12 cents per share. The dividend was paid on Nov 19, 2013 to shareholders of record as of Nov 9.
Additionally, on Dec 17, 2013, TD Ameritrade paid a special cash dividend of 50 cents per share to shareholders of record as of Dec 3. Overall, the company disbursed two special dividends in fiscal 2013.
Estimate Revisions Show Potency
In the last 60 days, the Zacks Consensus Estimate for 2013 increased nearly 1% to $1.34 per share. However, for 2014, the Zacks Consensus Estimate declined roughly 1% to $1.62 per share over the same time frame.
Some better-ranked investment brokers worth considering include Investment Technology Group Inc. (ITG), KCG Holdings, Inc. (KCG) and Ladenburg Thalmann Financial Services Inc. (LTS). All these stocks sport a Zacks Rank #1 (Strong Buy).
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