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TD Ameritrade Crushes Estimates for Q3

By Eric Volkman – Updated Jul 23, 2020 at 9:42PM

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It's a securities brokerage world these days; we only live in it.

Collectively, analysts following the fortunes of online brokerage TD Ameritrade (AMTD) were expecting the company to have a good quarter, but not this good.

TD Ameritrade reported on its third quarter of fiscal 2020, and some of its results were quite impressive. Net revenue increased by 6% year over year to almost $1.59 billion on the back of daily average revenue trades (DARTs, a crucial yardstick for brokerages) that rose more than fourfold to hit a new quarterly record of 3.4 million. Meanwhile, adjusted net income shot 26% higher to $591 million, or $1.09 per share.

Traders working on a trading floor.

Image source: Getty Images.

Those headline numbers trounced prognosticator expectations. On average, they were modeling $1.41 billion in revenue, and an adjusted per-share net profit of $0.85.

Like other financial services companies and brokerages lately, TD Ameritrade benefited from very lively securities trading, as the coronavirus pandemic has dramatically increased uncertainty about the world's economic future. This, despite the fact that the company was essentially forced to eliminate trading commissions to conform with an industrywide trend that started last year.

This could very well be TD Ameritrade's final quarter as an independent company, however. In June, shareholders overwhelmingly approved the brokerage's merger with longtime rival Charles Schwab (SCHW -2.21%). TD Ameritrade is effectively being bought out by Schwab in a blockbuster all-stock deal announced last November that was valued at $26 billion in total.

The Schwab/TD Ameritrade tie-up is expected to close sometime before the end of the year. The merger has received antitrust approval from the Justice Department, a major regulatory hurdle.

Eric Volkman owns shares of TD Ameritrade. The Motley Fool recommends Charles Schwab. The Motley Fool has a disclosure policy.

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