TD Ameritrade’s (AMTD) performance will likely depend on the economic and political factors prevailing in the economy. Supportive measures would help the company improve its performance, which would help boost the stock. In the past six months, the stock increased 22.2%.
In the quarter that ended in March, TD Ameritrade’s performance was supported by strong volatility due to the Trump Administration’s announcement about imposing tariffs and interest rate hike expectations. For the company, a rising interest rate environment would mean higher interest income from interest-earning assets, which would boost the interest income.
What to expect
TD Ameritrade also garners interest income from the margin loans it advances. These loans are backed by customers’ stocks and cash. A fall in the equity markets would decrease the value of customers’ securities, which would hamper the company’s financial position.
In the highly competitive market in the brokerage business, a key factor that would help companies retain clients would be reducing the charged commission. Similar steps by TD Ameritrade’s competitors might result in pricing wars, which would impact the company’s long-term prospects.
However, TD Ameritrade is expected to witness a boost in its business primarily due to making trading easier for its clients by leveraging digital tools. As of May 27, TD Ameritrade has an enterprise value of $24.63 billion. Other brokerages (VFH) including E*TRADE Financial (ETFC), Charles Schwab (SCHW), and Interactive Brokers Group (IBKR) have enterprise values of $15.92 billion, $57.68 billion, and -$18.43 billion, respectively.