That figure was better than the $0.20 per share in profitability that it had produced in last year's fiscal third quarter and the $0.22-per-share target that analysts had been expecting this time around. Revenue more than doubled to $540 million, in large part because of the company's $2.9 billion deal to buy TD Waterhouse.
Ameritrade's onetime rival grew as a diversified financial-services provider under the wing of banking giant Toronto Dominion
Upward-creeping rates have also allowed the company to widen its take on margin accounts. Granted, that can be a mixed blessing if higher rates sour investors on leveraged trades, but it's a pretty picture at the moment.
This will be a telltale week for the discount-brokerage industry, with E*Trade
This doesn't mean investors are being taken advantage of along the way. Instead, the consolidation has only made the industry stronger through realized efficiencies. Three months ago, Ameritrade raised its fiscal 2006 outlook while hosing down its 2007 forecast. This morning, it's tightening its 2006 profit range while inching its fiscal 2007 guidance higher. It now expects to earn between $0.99 and $1.21 a share in its new fiscal year, which starts in less than three months. At its midpoint, new shareholders are picking up Ameritrade at a reasonable 13 times forward earnings.
No one is buying in to this sector naively. Buyers are accepting the reality that snapping up a stake in Ameritrade or any of its peers is an investment based on the expectation of healthy trading activity in the future. The new face of Ameritrade may offer a better-rounded, asset-based package, but stock trading activity will ultimately dictate whether that face smiles or frowns.
For now, it's smiling.
Longtime Fool contributor Rick Munarriz has been trading exclusively through discount brokers since 1990, but he does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. Charles Schwab is a Motley Fool Stock Advisor recommendation. The Fool has a disclosure policy .