Retail brokerage TD Ameritrade Holding Corp. fell to its lowest level in two months as quarterly revenue fell short of analysts’ estimates and low interest rates weighed on margins.
Sales decreased 1.1 percent to $803 million during the fiscal second quarter that ended March 31, from $812 million a year earlier, the Omaha, Nebraska-based company said today in a statement. The results came in lower than the average analyst estimate of $819 million, according to a Bloomberg survey. Earnings per share of 35 cents were in line with the consensus analyst forecast.
The “top-line miss versus Street expectations will be viewed as disappointing,” Steven Chubak, an analyst at Nomura Holdings Inc., wrote in a note to clients. “We could see negative revisions off the back of these results.”
TD Ameritrade’s shares slid 2.8 percent to $35.42 at 4 p.m. in New York after earlier decreasing as much as 3.3 percent. The shares closed at the lowest level since Feb. 9.
A slew of mixed economic data has signaled that the Federal Reserve may have reason to delay raising interest rates beyond this summer. As the timing for Fed tightening gets pushed further out, that makes it more difficult for TD Ameritrade to increase overall net interest margin, Chief Financial Officer William Gerber said on the company’s conference call.
Average revenue per trade for the retail brokerage fell to $12.02, marking a second straight quarterly decline and the lowest level since the second quarter of 2012. The measure was at $12.97 for the three months ended Sept. 30, 2014, the highest in more than four years.
TD Ameritrade also reported net new client assets of about $16.3 billion for an annualized growth rate of 10 percent. The company also said it executed 477,000 client trades per day, on average, for an activity rate of 7.4 percent.
“We definitely have a shift of our clients’ trading into futures, which is one of our lowest commission-per-trade products,” Fred Tomczyk, president and chief executive officer of TD Ameritrade, said in an interview on Bloomberg Television’s “Street Smart” with Alix Steel. “We also got more trades in the quarter from our more active clients, who have a better commission price.”