Analyzing TD Ameritrade (AMTD) and Its Competitors

TD Ameritrade (NASDAQ: AMTD) is one of 31 publicly-traded companies in the “Security brokers & dealers” industry, but how does it weigh in compared to its competitors? We will compare TD Ameritrade to similar businesses based on the strength of its analyst recommendations, profitability, institutional ownership, earnings, valuation, dividends and risk.

Institutional & Insider Ownership

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92.0% of TD Ameritrade shares are held by institutional investors. Comparatively, 63.6% of shares of all “Security brokers & dealers” companies are held by institutional investors. 0.4% of TD Ameritrade shares are held by company insiders. Comparatively, 21.8% of shares of all “Security brokers & dealers” companies are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares TD Ameritrade and its competitors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
TD Ameritrade 23.39% 18.27% 3.39%
TD Ameritrade Competitors 5.55% 3.62% 5.12%

Analyst Recommendations

This is a summary of current ratings and recommmendations for TD Ameritrade and its competitors, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
TD Ameritrade 1 5 10 0 2.56
TD Ameritrade Competitors 313 1351 1420 67 2.39

TD Ameritrade presently has a consensus target price of $61.17, suggesting a potential upside of 3.27%. As a group, “Security brokers & dealers” companies have a potential downside of 1.89%. Given TD Ameritrade’s stronger consensus rating and higher possible upside, analysts clearly believe TD Ameritrade is more favorable than its competitors.

Valuation and Earnings

This table compares TD Ameritrade and its competitors revenue, earnings per share (EPS) and valuation.

Gross Revenue Net Income Price/Earnings Ratio
TD Ameritrade $3.68 billion $872.00 million 32.19
TD Ameritrade Competitors $5.87 billion $745.79 million 24.17

TD Ameritrade’s competitors have higher revenue, but lower earnings than TD Ameritrade. TD Ameritrade is trading at a higher price-to-earnings ratio than its competitors, indicating that it is currently more expensive than other companies in its industry.

Dividends

TD Ameritrade pays an annual dividend of $0.84 per share and has a dividend yield of 1.4%. TD Ameritrade pays out 45.7% of its earnings in the form of a dividend. As a group, “Security brokers & dealers” companies pay a dividend yield of 1.6% and pay out 35.0% of their earnings in the form of a dividend. TD Ameritrade lags its competitors as a dividend stock, given its lower dividend yield and higher payout ratio.

Volatility & Risk

TD Ameritrade has a beta of 1.42, indicating that its stock price is 42% more volatile than the S&P 500. Comparatively, TD Ameritrade’s competitors have a beta of 8.41, indicating that their average stock price is 741% more volatile than the S&P 500.

Summary

TD Ameritrade beats its competitors on 8 of the 15 factors compared.

TD Ameritrade Company Profile

TD Ameritrade Holding Corporation provides securities brokerage and related technology-based financial services to retail investors, traders, and independent registered investment advisors (RIAs) in the United States. Its products and services include tdameritrade.com, a Web platform for self-directed retail investors; Trade Architect, a Web-based platform for investors and traders to identify opportunities and stay informed; thinkorswim, a desktop platform for traders; and TD Ameritrade Mobile, which allows on-the-go investors and traders to trade and monitor accounts. The company also offers TD Ameritrade Institutional that provides brokerage and custody services to approximately 6,000 independent RIAs and their clients; TD Ameritrade Education, which allows investor education for stocks, options, income investing, and portfolio management; TD Ameritrade's Goal Planning that offers investment consulting and planning services; Selective Portfolios, an advisory service, which develops portfolios of exchange-traded funds (ETFs) and mutual funds; AdvisorDirect, a national referral service for investors; TD Ameritrade Singapore Pte. Ltd. that enables retail investors in Singapore to trade the U.S. markets; and TD Ameritrade Corporate Services, which provide self-directed brokerage services to employees of corporations. In addition, it offers various retail brokerage products and services, such as common and preferred stocks; ETFs; options; futures; foreign exchange; mutual funds; fixed income products; primary and secondary offerings of fixed income securities, closed-end funds, and preferred stocks; margin lending; cash management services; and annuities. The company provides its services primarily through the Internet, a network of retail branches, mobile trading applications, interactive voice response, and registered representatives through telephone. TD Ameritrade Holding Corporation was founded in 1971 and is headquartered in Omaha, Nebraska.

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