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Understanding TD Ameritrade’s Valuations


Sep. 14 2017, Updated 7:38 a.m. ET

Lower valuations

In fiscal 3Q17, TD Ameritrade Holding (AMTD) reported total client assets of $882.0 billion. Wall Street analysts have given AMTD stock a one-year price target of $48.50, which reflects a 12.9% rise from its current price. AMTD has a one-year forward EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) ratio of 12.1x compared to its average competitors’ ratio of 35.5x. Below are the one-year forward EV-to-EBITDA ratios for other brokerage giants (XLF):

  • Charles Schwab (SCHW): 46.7x
  • E*Trade Financial (ETFC): 42.6x
  • CBOE Holdings (CBOE): 17.3x
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TD Ameritrade’s valuations are currently discounted, mainly due to the rise in its total operating expenses in fiscal 3Q17 compared to fiscal 3Q16. The company is expected to see an increase in its valuations in the upcoming quarter since it plans to complete the acquisition of Scottrade by fiscal 4Q17.

EV-to-sales ratio

TD Ameritrade’s one-year forward EV-to-sales ratio is 5.7x. Other brokerage giants (XLF) have the following ratios:

  • Charles Schwab (SCHW): 22.3x
  • E*Trade Financial (ETFC): 20.9x
  • CBOE Holdings (CBOE): 11.8x

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