NEW YORK (Reuters) - Online brokerage TD Ameritrade Holding Corp (AMTD.O) beat expectations on Thursday with a 29 percent rise in third-quarter profit, helped by brisk trading, and increased its outlook for the year.
The company's stock rose 5 percent after it increased the midpoint of its 2008 profit forecast by 2 cents a share, and after its CEO revealed strong trading numbers so far this month.
TD Ameritrade shares were mostly in line with those of its peers, however, as analysts noted the forecast adjustment implies slightly lower earnings than the Street had expected for the company's fiscal fourth quarter.
"While yesterday and today have been wonderful days as far as the market goes, we've been going through a very difficult cycle," Chief Executive Joe Moglia said in an interview.
"To ignore that, as we go into a seasonally slow time of the year, I think would be imprudent."
TD Ameritrade earned $204.4 million, or 34 cents per share, in the quarter ended June 30, up from $158.7 million, or 26 cents a share, in the year-earlier period.
Revenue jumped 15 percent to $623.6 million in the quarter. On average, analysts polled by Reuters Estimates had expected earnings of 32 cents a share on revenues of $612.1 million.
The company said it now sees an earnings midpoint of $1.34 per share for this year, up from a previous midpoint of $1.32. That suggests EPS of 29 cents in the fourth quarter, 3 cents below analysts' expectations.
"We see an initial positive reaction which may fade as investors realize that certain key metrics lagged competitors and new 'higher' guidance has negative implications for next quarter," Bank of America analyst Michael Hecht said in a note.
Trading revenue -- on which TD Ameritrade relies more than its competitors -- was up 25 percent.
Average client trades per day rose 22 percent from the year-ago period. Moglia said the brokerage has averaged about 321,000 client trades per day so far in July, which is higher than in the previous two months, but warned that the trend may not continue amid pressure on the U.S. economy.
"Entering the summer season, with everything going on in the economy, we would be more conservative than suggesting that this number is going to hold up over the span of the rest of this quarter," he said on a conference call.
The Omaha, Nebraska-based company wants to expand its base of client assets as part of a shift away from relying on trading revenue. It said on Thursday it held $309 billion in client assets at the end of last month, up slightly from the same time last year.
TD Ameritrade's stock advanced 94 cents or 5.1 percent to $19.57 on the Nasdaq.
The shares of rivals were also up amid a broad rise in financials. Charles Schwab Corp SCHW.O jumped more than 14 percent on Wednesday after it too beat earnings expectations and added another 2.8 percent Thursday. E*Trade Financial Corp (ETFC.O), which is scheduled to report quarterly results next week, rose 30 cents or 9.6 percent to $3.44.
The brokers have managed to ride out many of the problems facing other financial companies. TD Ameritrade is off 2 percent in 2008, far less than financial stocks in general.
Moglia, who will move from CEO to chairman in October, suggested the current bear cycle in the financial sector will continue for six to 12 more months.
He told Reuters new federal rules that aim to crack down on short-selling will likely relieve some of the downward pressure on financial stocks, but they should have a "reasonably minimal" impact on his clients.
Fred Tomczyk, the chief operating officer, will take over from Moglia on October 1.
Toronto-Dominion Bank (TD.TO), which holds a 39.9 percent stake in TD Ameritrade, said the results should add C$74 million ($74 million) in net income for its wealth management arm.
Editing by Gerald E. McCormick and Steve Orlofsky