On Tuesday, TD AMERITRADE (NYSE: AMTD) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Discount brokers have become increasingly popular as a low-cost way to invest, and TD AMERITRADE is a big player in the discount brokerage space. But competition has become fierce, and even with markets at new highs, some investors have been reluctant to put their money to work ever since the bear market of 2008. Let's take an early look at what's been happening with TD AMERITRADE over the past quarter and what we're likely to see in its quarterly report.

Stats on TD AMERITRADE

Analyst EPS Estimate

$0.26

Change From Year-Ago EPS

4%

Revenue Estimate

$676.3 million

Change From Year-Ago Revenue

0.5%

Earnings Beats in Past 4 Quarters

3

Source: Yahoo! Finance.

Are things looking up for TD AMERITRADE?
Analysts have gotten more optimistic about TD AMERITRADE's earnings prospects over the past few months. They've boosted their earnings-per-share estimates for the just-ended quarter by a penny, and full-year fiscal 2013 estimates have risen by a nickel per share. The stock has also performed well, jumping more than 11% since early January.

TD AMERITRADE and its discount peers offer low-cost trading for stocks, ETFs, and other financial products. By offering services at a fraction of the cost of full-service brokers, discount brokers have grown substantially over the years, broadening their product lines and offering new services such as banking.

But the industry has gotten fiercely competitive, especially as trading activity has fallen in recent years. TD AMERITRADE has answered by joining the big fee fight over exchange-traded funds, with its offering more than 100 ETFs from various fund families at no commission. Yet archrival Schwab (NYSE: SCHW) answered back with its ETF OneSource offering earlier this year, with a suite of 105 ETFs one-upping TD AMERITRADE's list.

Competition is also coming from other corners. Leveraging its purchase of Merrill Lynch during the financial crisis, Bank of America (NYSE: BAC) has reupped its efforts to attract new customers through its Merrill Edge discount-brokerage unit in an attempt to gain the opportunity to cross-sell clients into B of A banking and other financial products.

In TD AMERITRADE's quarterly report, be sure to see how the broker's ETF business is faring against Schwab and other competitors. If its attempt to draw in assets has been successful, then the move could continue paying dividends for TD AMERITRADE well into the future.

Bank of America has worked hard to become an all-purpose provider of financial services to millions of customers. But does the stock belong in your portfolio? Find out in The Motley Fool's premium research report on B of A, where analysts Anand Chokkavelu, CFA, and Matt Koppenheffer, financials bureau chief, lift the veil on the bank's operations, including detailing three reasons to buy and three reasons to sell. Click here now to claim your copy.

Click here to add TD AMERITRADE to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Fool contributor Dan Caplinger owns warrants on Bank of America. You can follow him on Twitter: @DanCaplinger. The Motley Fool recommends TD AMERITRADE and owns shares of Bank of America. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.