After a strong first quarter, Ameritrade
Sales for the quarter dropped 9.4% to $232.5 million. Revenues from commissions and clearing fees were hit hard, falling 24.3% to $128 million. Daily average revenue trades were 167,209, or 21% lower. Fortunately for Ameritrade, higher interest rates have caused its interest revenue to rise dramatically to $116.3 million, a 76.2% year-over-year increase.
Another positive for the company was its reduced operating expenses to $115.8 million, a 5% decline from the year-ago figure of $121.7 million. It's a good thing, too, because with the price wars taking place among the competition, such as Motley Fool Stock Advisor recommendation Schwab
On top of operational improvements, its balance sheet continues to look attractive with $254.1 million in cash and equivalents, and no long-term debt. Ameritrade certainly thinks it looks enticing; it bought back even more shares over the past quarter -- repurchasing 2.5 million shares at a cost of $30.5 million.
With its earnings estimate of $0.77 to $0.87 per share, narrowed from its prior range of $0.77 to $0.90, and its current price of around $11, the company is trading at 13 times current-year earnings. At this level, given the improved operating expenses, Ameritrade's stock appears poised to appreciate substantially once trading picks up again.
When will traders return from their vacation? How good is your crystal ball working? Rather than trying to time a positive investing environment, consider dipping your toe into reasonably priced Ameritrade shares, and dollar-cost-average when the opportunity presents itself.
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Fool contributor Jeremy MacNealy does not own shares in any of the companies mentioned.