TD Ameritrade CEO Keeps Cool About Post-Earnings Share Slide

(Bloomberg) -- Better-than-expected quarterly earnings failed to keep shares of TD Ameritrade Holding Corp. from falling as much as 2.2 percent on Wednesday. It wasn’t much of a surprise to Tim Hockey, the chief executive.

He pointed to the stock’s 5.2 percent gain a week ago, a “big leap” that came after Charles Schwab Corp. reported results that topped estimates. Shares are up 17 percent over the last month. “We expected a muted reaction” on Wednesday, Hockey told Bloomberg via a phone interview, after his company’s conference call.

Earlier, the company posted a profit of $1.11 a share on a comparable basis for the latest quarter, versus an estimate of $1.02, and said revenue rose to $1.52 billion, above the $1.49 billion forecast.

As for December’s sell-off in the stock market, analysts are still trying to figure out what happened, Hockey added, calling the month “quite an anomaly.” Volatility, he added, has since come down.

Hockey doesn’t see a revival of 2017’s fee price war any time soon, though commissions face steady erosion as clients negotiate for lower prices. TD Ameritrade is also seeing the fastest growth in its futures business, where commissions are lower. Overall, lower fees are good for retail clients, who in turn boost their trading, Hockey said.

Sandler O’Neill analyst Richard Repetto said in a note that TD Ameritrade’s quarterly revenue had outperformed as higher asset-based revenue offset lower commissions. Commissions were about $33 million below expectations as December daily average revenue trades were up 14 percent versus an expected 25 percent increase, and the average commission declined 3 percent “due to mix,” he wrote. The company, Repetto said “realized the benefit of rate increases in September/December while trading commissions were solid ... but below expectations.”

The question of whether the U.S. government shutdown will hit markets and trading is still open, Hockey said, though it’s clearly impacting consumer sentiment, which is “turning south.” So far, TD Ameritrade is seeing “no effect on any front.”

To contact the reporter on this story: Felice Maranz in New York at fmaranz@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Chris Nagi

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