While there are many positives to take from Ameritrade's
Aside from light volume, there is much to like about Ameritrade's current results. For its 2004 fiscal year the company posted net revenues of $880 million, a year-over-year increase of 23%. More impressively, with net income of $272 million for 2004, it managed to pull off a 100% year-over-year increase in earnings per share (EPS).
The doubling of its EPS is likely a result of healthy profit margins and the reduction of outstanding shares. In 2004, the company bought back 26 million shares, making a greater amount of earnings available to each share. Shareholders have to like bigger slices of Ameritrade's pie.
Equally impressive is that Ameritrade's return on equity improved 83% year over year to its current level of 22%. Couple this with net profit margins of 31%, and it is clear that Ameritrade is doing the little things right.
Though the industry experienced a hiccup in trading volume for 2004, Ameritrade executives are anticipating a pickup in volume after the presidential election. With increased trading expected in the quarters ahead, the company raised its EPS forecast into a range of $0.72 to $0.89 for 2005.
If indeed a buying stampede starts anew, given the company's forward price to earnings ratio (P/E) of 13 with expected earnings growth of 39%, Ameritrade shareholders appear poised to make a run with the bulls.
Fool contributor Jeremy MacNealy does not own shares in any of the companies mentioned.