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Analyzing TD Ameritrade’s Higher Valuation after Fiscal 2Q18

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Nov. 20 2020, Updated 3:10 p.m. ET

Price-to-book ratios

TD Ameritrade’s (AMTD) NTM (next-12-month) price-to-book ratio is 4.1x, higher than the peer average of 4.0x, indicating its higher valuation. Competitors LPL Financial (LPLA), E*TRADE Financial (ETFC), and Charles Schwab (SCHW) have NTM price-to-book ratios of 6.1x, 2.2x, and 3.6x, respectively.

TD Ameritrade may be more highly valued than peers due to the volatility between January and March 2018, which may have boosted trading volumes. However, the company’s fiscal 2Q18 results missed analysts’ earnings estimate, which might concern market observers.

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What’s ahead?

In fiscal 2Q18, TD Ameritrade distributed dividends of $119 million, and its total operating expenses rose substantially QoQ (quarter-over-quarter), from $921 million to $1 billion. Its employee compensation and benefits expenses rose QoQ from $415 million to $461 million. 

In fiscal 2018, TD Ameritrade’s valuation could rise as the company makes deployments toward innovation, attracting customers’ attention. Brokerage giants’ performance this year could depend on a variety of market factors, including the Fed raising interest rates. While AMTD’s LTM (last-12-month) price-to-book ratio is 4.7x, peers (XLF) LPL Financial, E*TRADE, and Charles Schwab have LTM ratios of 5.7x, 2.3x, and 4.0x, respectively.

Check out all the data we have added to our quote pages. Now you can get a valuation snapshot, earnings and revenue estimates, and historical data as well as dividend info. Take a look!

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