Categories Earnings, Finance

Earnings: TD Ameritrade posts weak Q2 revenues amid muted investor sentiment

TD Ameritrade (Nasdaq: AMTD) reported weaker than expected revenues for the second quarter of 2019 when earnings rose sharply and topped the Street view. The company’s stock dropped about 3% during Tuesday’s after-hours session.

The Omaha, Nebraska-based provider of technology-based financial services reported adjusted earnings of $0.93 per share for the March quarter, up 27% from the year-ago quarter and slightly above the analysts’ forecast. Unadjusted profit rose to $499 million or $0.89 per share from $271 million or $0.48 per share in the first quarter of 2018. The bottom-line benefitted from a 27% decline in operating expenses.

The earnings growth also reflects a 3% year-over-year increase in net revenues to $1.45 billion. However, analysts were looking for faster top-line growth. The positive sentiment among traders over the market rebound and revival of the leading indexes was partially offset by pessimism over the weakening global economy and the correction towards the end of last year.

The positive sentiment over the market rebound was partially offset by pessimism over the weakening global economy

The overall performance was boosted by a 7% annualized growth in net new client assets to $20 billion. Average client trades per day were 860,000 during the three-month period, down 9% from the record prior-year quarter.

Tim Hockey, CEO of the company, said, “We are confident in our long-term strategy to compete and win on the client experience for both individual investors and registered investment advisors. While net new asset growth slowed in the quarter, net new assets are up 6 percent year-to-date from last year.”

During the quarter, TD Ameritrade repurchased about 6.5 million shares for $317 million. It also declared a quarterly cash dividend of $0.30 per share, to be paid on May 21, 2019, to shareholders of record on May 7, 2019. The management said it is prepared to tackle short-term challenges through the second half of the year and will continue to invest in the business.

After reaching a record high last year, shares of TD Ameritrade declined progressively, losing more than 7% in the past twelve months. The stock closed Tuesday’s regular session higher but slipped in the after-hours.

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