TD Ameritrade (AMTD) managed to beat estimates solidly across the board in their fourth quarter earnings report as investors began to re-engage in the stock market. TD Ameritrade reported a net income of $192 million, or 35 cents per share. That is up a little more than 30% from the same quarter a year ago. The online broker brought in revenues of $752 million in the quarter. Analysts were expecting a net income of 33 cents per share on revenue of $735.9 million.
There was plenty of good news in the report, but the biggest driver of earnings growth was re-engagement by the retail investor. TD Ameritrade reported that Daily Average Revenue Trades (DARTs) were up 24% from a year ago to a level of 414,000 in the latest quarter. Ameritrade derives about half of its revenue from trading, so the retail investor getting involved again definitely drove this earnings beat.
TD Ameritrade CEO Fred Tomczyk said, “Trading activity was at its highest level in more than two years.” Looking to the year ahead, Tomczyk said he expects to see more investors shifting from fixed income to equities as they are willing to take on more risk. He also noted in the conference call that TD Ameritrade is seeing 2,500 new mobile users every day, and the company expects the move to tablets and smart phones to continue.
The stock market loved this report. In fact, TD Ameritrade shares jumped almost 4.5% on the day Tuesday after the earnings release. Shares of AMTD are now trading at their highest level since the 1999 dot.com peak.
For the full press release of TD Ameritrade’s earnings click here.