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MarketScreener Homepage  >  Equities  >  Nyse  >  The Charles Schwab Corporation    SCHW

THE CHARLES SCHWAB CORPORATION

(SCHW)
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TD Ameritrade's new assets to soar for fifth straight year: CEO

09/10/2013 | 02:23pm EST
Fred Tomczyk, President & CEO of TD Ameritrade Holding Corp. speaks during the Sandler O'Neill + Partners, L.P. global exchange and brokerage conference in New York

NEW YORK (Reuters) - TD Ameritrade Holding Corp expects (>> TD Ameritrade Holding Corp.) to report next month that new client assets rose at a double-digit rate for the fifth consecutive year, exclusive of market fluctuations, a senior executive said Tuesday.

NEW YORK (Reuters) - TD Ameritrade Holding Corp expects (>> TD Ameritrade Holding Corp.) to report next month that new client assets rose at a double-digit rate for the fifth consecutive year, exclusive of market fluctuations, a senior executive said Tuesday.

That's significant for the online brokerage firm since its return on client assets is expected to skyrocket once U.S. interest rates begin rising. TD Ameritrade, whose fiscal year ends on September 30, had $94 billion of interest-rate sensitive assets in fee-based and other customer accounts as of June 30.

The continuing inflow of new money, which TD Ameritrade invests for itself until used by clients, also vindicates a strategy put in place by Chief Executive Fred Tomczyk about four years ago to supplement TD Ameritrade's long-time reliance on commissions with fee-based accounts.

"Assets have been growing for years, and we see no signs of that abating," Tomczyk said at a conference in New York sponsored by Barclays.

The firm, the largest online U.S. broker as measured by client trades, has previously said that it expects net new assets to grow between 7 percent and 11 percent in its 2013 fiscal year, following an 11 percent rise in 2012 and a 12 percent jump in 2011.

Tomczyk conceded that asset growth gets harder as total assets rise, but said after the presentation that the company's business of selling services to investment advisers has helped in the new-asset race. While new assets from retail clients who invest directly with the firm are growing at a 5 percent-to-9 percent rate, those from clients of investment advisers are going up at an 11 percent to 17 percent rate, he said.

The firm's combined net new asset growth rate as of June 30 was 11 percent.

The Omaha, Nebraska-based firm has hardly abandoned its heritage of appealing to active traders who generate commissions. TD Ameritrade also announced Tuesday that clients' daily average trades in August rose 2 percent from July 2013 and 26 percent from August 2012, to 382,000 a day.

Investors tend to dismiss such good trading months as unsustainable, Tomczyk said, but added that volume is likely to rise even more when the Federal Reserve reverses its quantitative easing policy, something expected to happen by year-end. That is because active traders seize on volatility that is likely to occur when the Fed unwinds its bond purchases.

A one percent rise in the federal funds rate should translate to about a 32-cent rise in TD Ameritrade's earnings per share in the first year after the rate rise - and to 54 cents a share by the end of the third year after such a rise - according to the company.

TD Ameritrade is expected to earn $1.20 per share in fiscal 2013, according to the consensus estimate of 17 analysts surveyed by Thomson I/B/E/S. It earned $1.06 a share in 2012.

Shares of TD Ameritrade have grown by 62.7 percent in the past 12 months, including reinvested dividends. Some investors at the Barclays conference said the stock appears fully valued, with the market giving TD and other discount brokers credit for the expected jump in interest rates.

Tomczyk said that TD Ameritrade has the lowest valuation among its online brokerage peers.

Shares of TD Ameritrade were up 3.3 percent at $27.64 in afternoon trading, compared with a 0.65 percent rise in the S&P 500 index.

Shares of rival E*Trade Financial Corp (>> E TRADE Financial Corporation) were up by about 3.9 percent as Macquarie Securities raised its recommendation on E*Trade to "outperform." Regulators' decision last week to let the company withdraw $100 million of capital from its bank was a "significant" vote of confidence in E*Trade's financial recovery plan, Macquarie analyst Sameer Murukutla wrote in a note to investors.

(Reporting by Jed Horowitz; Editing by Phil Berlowitz)


© Reuters 2013
Stocks mentioned in the article
ChangeLast1st jan.
DJ INDUSTRIAL -0.08% 30936.62 End-of-day quote.1.28%
E*TRADE FINANCIAL, LLC -1.58% 49.26 End-of-day quote.0.00%
FIRST FINANCIAL CORPORATION -1.24% 39.96 End-of-day quote.4.14%
NASDAQ 100 0.10% 13497.3715 End-of-day quote.4.62%
NASDAQ COMP. 0.08% 13647.1322 End-of-day quote.5.08%
RISE, INC. 0.00% 24 End-of-day quote.0.00%
S&P 500 -0.08% 3852.13 End-of-day quote.2.64%
THE CHARLES SCHWAB CORPORATION -0.16% 56.99 End-of-day quote.7.62%
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Financials (USD)
Sales 2020 11 482 M - -
Net income 2020 3 063 M - -
Net cash 2020 33 911 M - -
P/E ratio 2020 26,1x
Yield 2020 1,26%
Capitalization 107 B 107 B -
EV / Sales 2020 6,39x
EV / Sales 2021 5,21x
Nbr of Employees 22 100
Free-Float 83,9%
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Technical analysis trends THE CHARLES SCHWAB CORPORATION
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Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 19
Average target price 62,56 $
Last Close Price 57,08 $
Spread / Highest target 27,9%
Spread / Average Target 9,60%
Spread / Lowest Target -12,4%
EPS Revisions
Managers and Directors
NameTitle
Walter William Bettinger President, Chief Executive Officer & Director
Charles Robert Schwab Chairman
Joseph Raymond Martinetto Chief Operating Officer & Senior Executive VP
Peter B. Crawford Chief Financial Officer & Executive Vice President
Tim Heier Chief Technology Officer & Executive VP