Hot stock to watch: TD Ameritrade Holding Corp.(NASDAQ: AMTD)

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TD Ameritrade Holding Corp.(NASDAQ: AMTD) stock rose over 1.8% on 22nd October, 2019 (as of 9:54 am GMT-4; Source: Google finance) after the company posted better than expected results for the fourth quarter of FY 19. The company has eliminated the fees for most of its online trading activity like online exchange-listed stock, ETF (US and Canadian), and option trades, earlier this month, which will reduce the company’s revenue. The company has reported fiscal fourth-quarter net income of $551 million compared to $454 million, in the year-ago period.

The rates have moved from $6.95 to $0, with the change to be effective from October 3, 2019. Clients trading options will now have to pay $0.65 per contract with no exercise and assignment fees. This decision will impact revenue impact of approximately $220-240 million per quarter, or approximately 15-16 percent of net revenues, based on June Quarter fiscal 2019 revenue.

AMTD in the fourth quarter of FY 19 has reported the adjusted earnings per share of $1.05, beating the analysts’ estimates for the adjusted earnings per share of 98 cents, according to Refinitiv consensus estimates. The company had reported the adjusted revenue growth of 11 percent to $1.56 billion in the fourth quarter of FY 19, beating the analysts’ estimates for revenue of $1.47 billion.

For the FY 19, the company has posted 7% growth in the net new client assets to approximately $93 billion, on a year-over-year basis. The company has delivered, record average client trades per day of approximately 860,000, up 6 percent year over year. For the full year the company has delivered 10% rise in the net revenues to $6 billion, year over year. Ending client assets were of approximately $1.3 trillion for FY 19, up 2 percent year over year. For the fourth quarter 2019, the Net new client assets were of approximately $22 billion, which is an annualized growth rate of 7 percent and average client trades per day were of approximately 837,000, which is up 5 percent year over year.

TD Ameritrade expects revenue for 2020 to range between $5.3 billion and $5.9 billion, compared to the $5.93 billion expected by analysts, according to Refinitiv. Ameritrade expects its earnings to decline in the first quarter as it adjusts to losing more than $220 million in commission revenue because of the price change it announced earlier this month. For the fiscal first quarter, the analysts project adjusted earnings to be of 71 cents a share on sales of $1.25 billion.

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