In contrast to the bullish rise of the broader equities market on Wednesday, TD Ameritrade (AMTD) stock traded down. The reason is clear -- the online securities brokerage didn't hit the average analyst estimate for quarterly profitability.
TD Ameritrade's Q2 of fiscal 2020 saw it book net revenue of $1.48 billion, almost 2% higher on a year-over-year basis. That bettered the collective analyst projection of $1.41 billion. On the bottom line the company's non-GAAP (adjusted) net profit fell 10% to $468 million, or $0.86 per diluted share. Prognosticators were anticipating $0.87, however.
In spite of that, TD Ameritrade posted a set of encouraging operational metrics and other financial line items. Its new client assets, which rose by 13% to $45 billion, set a new record. The company also recorded a new high for the number of gross new funded retail accounts (608,000), which increased a very substantial 249%. It also set a record for daily average revenue trades (DARTs, a key metric for brokerages) at 2.1 million.
These gains were related to the increased securities market action in the run-up to, and during, the SARS-CoV-2 coronavirus outbreak. TD Ameritrade said that "[i]Inflows were robust as new and existing clients brought over new funds to capitalize on various trading opportunities when market concerns started to dominate the news cycle."
This should be one of the last, if not the last, earnings reporst for the company as a stand-alone entity. It said that its pending absorption by peer Charles Schwab (SCHW 0.36%), following a $25 billion buyout agreed last November, is on track to close in the second half of this year.
On Wednesday, while the broader stock market indexes posted gains, TD Ameritrade shares closed 3.7% lower. Charles Schwab also fell, but only marginally.