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Earnings Preview: TD Ameritrade fiscal 2Q

April 13, 2012
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OMAHA, Neb.—Online brokerage TD Ameritrade Holding Corp. is expected to report strong second-quarter earnings on Tuesday because the market was on a roll during the first three months of the year.

But the continued low interest rates could limit revenue growth for the Omaha-based company.

WHAT TO WATCH FOR: Investors will be looking for clues about the health of the overall market.

Ameritrade generates revenue from commissions it charges investors on trades and from asset-based fees and interest it gets on the assets it holds.

The current record-low interest rates limit how much Ameritrade can earn on its clients' deposit accounts and other investment products.

Growth in trades means more revenue for Ameritrade because of the fees it charges.

Credit Suisse analyst Howard Chen said in a research note that he remains neutral on Ameritrade's stock because of the interest-rate pressure and limited potential for trading growth.

WHY IT MATTERS: Ameritrade's results offer clues about the market's mood because of the hundreds of thousands of trades it handles each day for self-directed investors and registered investment advisers.

WHAT'S EXPECTED: Analysts polled by FactSet expect, on average, see Ameritrade posting net income of $139.7 million, or 25 cents a share, on revenue of $672.5 million.

LAST YEAR'S QUARTER: A year ago, TD Ameritrade reported $171.7 million net income, or 30 cents per share, as strong trading activity and asset growth boosted the company's profits. It had revenue of $718.2 million.

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Online:

TD Ameritrade Holding Corp.: www.amtd.com

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