Intrinsic value of TD Ameritrade Holding - AMTD

Previous Close

$42.45

  Intrinsic Value

$84.66

stock screener

  Rating & Target

str. buy

+99%

  Value-price divergence*

+5%

Previous close

$42.45

 
Intrinsic value

$84.66

 
Up/down potential

+99%

 
Rating

str. buy

 
Value-price divergence*

+5%

Our model is not good at valuating stocks of financial companies, such as AMTD.

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of AMTD stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 20.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.46
  6.90
  6.71
  6.54
  6.39
  6.25
  6.12
  6.01
  5.91
  5.82
  5.74
  5.66
  5.60
  5.54
  5.48
  5.43
  5.39
  5.35
  5.32
  5.29
  5.26
  5.23
  5.21
  5.19
  5.17
  5.15
  5.14
  5.12
  5.11
  5.10
  5.09
Revenue, $m
  3,327
  3,557
  3,795
  4,043
  4,302
  4,570
  4,850
  5,142
  5,445
  5,762
  6,093
  6,438
  6,798
  7,174
  7,568
  7,979
  8,409
  8,859
  9,330
  9,823
  10,340
  10,881
  11,447
  12,041
  12,663
  13,316
  14,000
  14,717
  15,469
  16,258
  17,085
Variable operating expenses, $m
 
  2,088
  2,212
  2,341
  2,474
  2,613
  2,758
  2,909
  3,067
  3,231
  3,402
  3,334
  3,520
  3,715
  3,919
  4,132
  4,355
  4,588
  4,832
  5,087
  5,354
  5,634
  5,928
  6,235
  6,558
  6,895
  7,250
  7,621
  8,011
  8,419
  8,847
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  2,009
  2,088
  2,212
  2,341
  2,474
  2,613
  2,758
  2,909
  3,067
  3,231
  3,402
  3,334
  3,520
  3,715
  3,919
  4,132
  4,355
  4,588
  4,832
  5,087
  5,354
  5,634
  5,928
  6,235
  6,558
  6,895
  7,250
  7,621
  8,011
  8,419
  8,847
Operating income, $m
  1,318
  1,468
  1,583
  1,703
  1,827
  1,957
  2,092
  2,232
  2,379
  2,532
  2,691
  3,104
  3,278
  3,459
  3,649
  3,847
  4,054
  4,271
  4,499
  4,736
  4,985
  5,246
  5,519
  5,806
  6,106
  6,420
  6,750
  7,096
  7,458
  7,839
  8,238
EBITDA, $m
  1,496
  1,775
  1,894
  2,018
  2,147
  2,281
  2,420
  2,566
  2,717
  2,876
  3,041
  3,213
  3,392
  3,580
  3,777
  3,982
  4,197
  4,421
  4,656
  4,902
  5,160
  5,430
  5,713
  6,009
  6,320
  6,645
  6,986
  7,344
  7,720
  8,113
  8,526
Interest expense (income), $m
  54
  64
  123
  183
  245
  310
  377
  448
  521
  597
  676
  759
  846
  936
  1,030
  1,129
  1,232
  1,340
  1,453
  1,571
  1,694
  1,824
  1,959
  2,101
  2,250
  2,406
  2,570
  2,741
  2,921
  3,110
  3,307
Earnings before tax, $m
  1,265
  1,405
  1,460
  1,520
  1,582
  1,647
  1,714
  1,785
  1,858
  1,935
  2,015
  2,345
  2,432
  2,523
  2,618
  2,718
  2,822
  2,932
  3,046
  3,166
  3,291
  3,422
  3,560
  3,704
  3,855
  4,014
  4,180
  4,354
  4,537
  4,729
  4,930
Tax expense, $m
  423
  379
  394
  410
  427
  445
  463
  482
  502
  522
  544
  633
  657
  681
  707
  734
  762
  792
  822
  855
  889
  924
  961
  1,000
  1,041
  1,084
  1,129
  1,176
  1,225
  1,277
  1,331
Net income, $m
  842
  1,025
  1,066
  1,109
  1,155
  1,202
  1,251
  1,303
  1,356
  1,412
  1,471
  1,712
  1,775
  1,842
  1,911
  1,984
  2,060
  2,140
  2,223
  2,311
  2,402
  2,498
  2,599
  2,704
  2,814
  2,930
  3,051
  3,179
  3,312
  3,452
  3,599

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,855
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  28,818
  28,915
  30,855
  32,873
  34,972
  37,157
  39,431
  41,801
  44,271
  46,846
  49,534
  52,338
  55,267
  58,327
  61,525
  64,869
  68,366
  72,025
  75,855
  79,864
  84,062
  88,459
  93,066
  97,894
  102,953
  108,257
  113,817
  119,648
  125,763
  132,176
  138,903
Adjusted assets (=assets-cash), $m
  26,963
  28,915
  30,855
  32,873
  34,972
  37,157
  39,431
  41,801
  44,271
  46,846
  49,534
  52,338
  55,267
  58,327
  61,525
  64,869
  68,366
  72,025
  75,855
  79,864
  84,062
  88,459
  93,066
  97,894
  102,953
  108,257
  113,817
  119,648
  125,763
  132,176
  138,903
Revenue / Adjusted assets
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
  0.123
Average production assets, $m
  1,142
  1,220
  1,302
  1,387
  1,475
  1,568
  1,664
  1,764
  1,868
  1,976
  2,090
  2,208
  2,332
  2,461
  2,596
  2,737
  2,884
  3,039
  3,200
  3,369
  3,546
  3,732
  3,926
  4,130
  4,343
  4,567
  4,802
  5,048
  5,306
  5,576
  5,860
Working capital, $m
  0
  -356
  -380
  -404
  -430
  -457
  -485
  -514
  -545
  -576
  -609
  -644
  -680
  -717
  -757
  -798
  -841
  -886
  -933
  -982
  -1,034
  -1,088
  -1,145
  -1,204
  -1,266
  -1,332
  -1,400
  -1,472
  -1,547
  -1,626
  -1,709
Total debt, $m
  1,817
  3,524
  5,234
  7,011
  8,860
  10,785
  12,789
  14,877
  17,053
  19,322
  21,689
  24,160
  26,741
  29,436
  32,254
  35,200
  38,281
  41,504
  44,878
  48,410
  52,109
  55,983
  60,041
  64,294
  68,752
  73,424
  78,323
  83,460
  88,847
  94,497
  100,424
Total liabilities, $m
  23,767
  25,474
  27,184
  28,961
  30,810
  32,735
  34,739
  36,827
  39,003
  41,272
  43,639
  46,110
  48,691
  51,386
  54,204
  57,150
  60,231
  63,454
  66,828
  70,360
  74,059
  77,933
  81,991
  86,244
  90,702
  95,374
  100,273
  105,410
  110,797
  116,447
  122,374
Total equity, $m
  5,051
  3,441
  3,672
  3,912
  4,162
  4,422
  4,692
  4,974
  5,268
  5,575
  5,895
  6,228
  6,577
  6,941
  7,322
  7,719
  8,136
  8,571
  9,027
  9,504
  10,003
  10,527
  11,075
  11,649
  12,251
  12,883
  13,544
  14,238
  14,966
  15,729
  16,529
Total liabilities and equity, $m
  28,818
  28,915
  30,856
  32,873
  34,972
  37,157
  39,431
  41,801
  44,271
  46,847
  49,534
  52,338
  55,268
  58,327
  61,526
  64,869
  68,367
  72,025
  75,855
  79,864
  84,062
  88,460
  93,066
  97,893
  102,953
  108,257
  113,817
  119,648
  125,763
  132,176
  138,903
Debt-to-equity ratio
  0.360
  1.020
  1.430
  1.790
  2.130
  2.440
  2.730
  2.990
  3.240
  3.470
  3.680
  3.880
  4.070
  4.240
  4.410
  4.560
  4.710
  4.840
  4.970
  5.090
  5.210
  5.320
  5.420
  5.520
  5.610
  5.700
  5.780
  5.860
  5.940
  6.010
  6.080
Adjusted equity ratio
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  842
  1,025
  1,066
  1,109
  1,155
  1,202
  1,251
  1,303
  1,356
  1,412
  1,471
  1,712
  1,775
  1,842
  1,911
  1,984
  2,060
  2,140
  2,223
  2,311
  2,402
  2,498
  2,599
  2,704
  2,814
  2,930
  3,051
  3,179
  3,312
  3,452
  3,599
Depreciation, amort., depletion, $m
  178
  307
  311
  315
  319
  324
  329
  334
  339
  344
  350
  109
  115
  121
  128
  135
  142
  150
  158
  166
  175
  184
  193
  203
  214
  225
  237
  249
  261
  275
  289
Funds from operations, $m
  1,890
  1,332
  1,376
  1,424
  1,474
  1,526
  1,580
  1,636
  1,695
  1,756
  1,820
  1,820
  1,890
  1,963
  2,039
  2,119
  2,202
  2,290
  2,381
  2,477
  2,577
  2,682
  2,792
  2,907
  3,028
  3,155
  3,288
  3,427
  3,574
  3,727
  3,888
Change in working capital, $m
  422
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
  -33
  -34
  -36
  -38
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -59
  -62
  -65
  -68
  -72
  -75
  -79
  -83
Cash from operations, $m
  1,468
  1,355
  1,400
  1,449
  1,500
  1,553
  1,608
  1,666
  1,725
  1,788
  1,853
  1,855
  1,926
  2,001
  2,079
  2,160
  2,245
  2,335
  2,428
  2,526
  2,629
  2,736
  2,849
  2,967
  3,091
  3,220
  3,356
  3,499
  3,649
  3,806
  3,970
Maintenance CAPEX, $m
  0
  -56
  -60
  -64
  -68
  -73
  -77
  -82
  -87
  -92
  -97
  -103
  -109
  -115
  -121
  -128
  -135
  -142
  -150
  -158
  -166
  -175
  -184
  -193
  -203
  -214
  -225
  -237
  -249
  -261
  -275
New CAPEX, $m
  -105
  -78
  -82
  -85
  -89
  -92
  -96
  -100
  -104
  -109
  -113
  -118
  -124
  -129
  -135
  -141
  -148
  -154
  -162
  -169
  -177
  -186
  -194
  -204
  -213
  -224
  -235
  -246
  -258
  -271
  -284
Cash from investing activities, $m
  -863
  -134
  -142
  -149
  -157
  -165
  -173
  -182
  -191
  -201
  -210
  -221
  -233
  -244
  -256
  -269
  -283
  -296
  -312
  -327
  -343
  -361
  -378
  -397
  -416
  -438
  -460
  -483
  -507
  -532
  -559
Free cash flow, $m
  605
  1,220
  1,258
  1,300
  1,343
  1,388
  1,435
  1,484
  1,534
  1,587
  1,643
  1,634
  1,694
  1,757
  1,823
  1,891
  1,963
  2,038
  2,117
  2,199
  2,286
  2,376
  2,471
  2,570
  2,674
  2,783
  2,897
  3,017
  3,142
  3,274
  3,412
Issuance/(repayment) of debt, $m
  0
  1,707
  1,709
  1,778
  1,849
  1,925
  2,004
  2,088
  2,176
  2,269
  2,367
  2,471
  2,580
  2,696
  2,817
  2,946
  3,081
  3,224
  3,374
  3,532
  3,699
  3,874
  4,059
  4,253
  4,457
  4,673
  4,899
  5,137
  5,387
  5,650
  5,927
Issuance/(repurchase) of shares, $m
  -382
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -366
  1,707
  1,709
  1,778
  1,849
  1,925
  2,004
  2,088
  2,176
  2,269
  2,367
  2,471
  2,580
  2,696
  2,817
  2,946
  3,081
  3,224
  3,374
  3,532
  3,699
  3,874
  4,059
  4,253
  4,457
  4,673
  4,899
  5,137
  5,387
  5,650
  5,927
Total cash flow (excl. dividends), $m
  239
  2,928
  2,968
  3,077
  3,192
  3,313
  3,439
  3,571
  3,710
  3,857
  4,010
  4,105
  4,274
  4,453
  4,640
  4,837
  5,044
  5,262
  5,491
  5,731
  5,984
  6,250
  6,529
  6,823
  7,131
  7,455
  7,796
  8,153
  8,529
  8,924
  9,339
Retained Cash Flow (-), $m
  -148
  -245
  -231
  -240
  -250
  -260
  -271
  -282
  -294
  -306
  -320
  -334
  -349
  -364
  -381
  -398
  -416
  -435
  -456
  -477
  -500
  -523
  -548
  -574
  -602
  -631
  -662
  -694
  -728
  -763
  -801
Prev. year cash balance distribution, $m
 
  1,855
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  4,538
  2,737
  2,837
  2,943
  3,053
  3,168
  3,289
  3,416
  3,550
  3,690
  3,771
  3,926
  4,088
  4,259
  4,439
  4,628
  4,826
  5,035
  5,254
  5,485
  5,727
  5,981
  6,248
  6,529
  6,824
  7,134
  7,459
  7,801
  8,161
  8,538
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  4,351
  2,505
  2,469
  2,423
  2,366
  2,299
  2,222
  2,135
  2,039
  1,935
  1,791
  1,675
  1,555
  1,430
  1,303
  1,176
  1,050
  927
  809
  697
  592
  496
  410
  333
  265
  208
  160
  121
  89
  64
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

TD Ameritrade Holding Corporation provides securities brokerage services 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 5,000 independent RIAs and their clients; TD Ameritrade's Goal Planning, which offers investment consulting and planning services; Investools, a suite of investor education products and services for stock, option, foreign exchange, futures, mutual fund, and fixed-income investors; Amerivest, an advisory service that develops portfolios of exchange-traded funds (ETFs) and mutual funds; AdvisorDirect, a national referral service for investors; and TD Ameritrade Corporate Services that 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.

FINANCIAL RATIOS  of  TD Ameritrade Holding (AMTD)

Valuation Ratios
P/E Ratio 26.5
Price to Sales 6.7
Price to Book 4.4
Price to Tangible Book
Price to Cash Flow 15.2
Price to Free Cash Flow 16.4
Growth Rates
Sales Growth Rate 2.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 47.9%
Cap. Spend. - 3 Yr. Gr. Rate -6.1%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 36%
Total Debt to Equity 36%
Interest Coverage 24
Management Effectiveness
Return On Assets 3.2%
Ret/ On Assets - 3 Yr. Avg. 3.3%
Return On Total Capital 12.4%
Ret/ On T. Cap. - 3 Yr. Avg. 12.9%
Return On Equity 16.9%
Return On Equity - 3 Yr. Avg. 16.8%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 33.3%
EBITDA Margin 45%
EBITDA Margin - 3 Yr. Avg. 46.2%
Operating Margin 39.6%
Oper. Margin - 3 Yr. Avg. 40.5%
Pre-Tax Margin 38%
Pre-Tax Margin - 3 Yr. Avg. 39.4%
Net Profit Margin 25.3%
Net Profit Margin - 3 Yr. Avg. 25.2%
Effective Tax Rate 33.4%
Eff/ Tax Rate - 3 Yr. Avg. 36.1%
Payout Ratio 43%

AMTD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AMTD stock intrinsic value calculation we used $3327 million for the last fiscal year's total revenue generated by TD Ameritrade Holding. The default revenue input number comes from 2016 income statement of TD Ameritrade Holding. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our AMTD stock valuation model: a) initial revenue growth rate of 6.9% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for AMTD is calculated based on our internal credit rating of TD Ameritrade Holding, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of TD Ameritrade Holding.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of AMTD stock the variable cost ratio is equal to 59.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for AMTD stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for TD Ameritrade Holding.

Corporate tax rate of 27% is the nominal tax rate for TD Ameritrade Holding. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the AMTD stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for AMTD are equal to 34.3%.

Life of production assets of 20.3 years is the average useful life of capital assets used in TD Ameritrade Holding operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for AMTD is equal to -10%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $5051 million for TD Ameritrade Holding - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 472.802 million for TD Ameritrade Holding is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of TD Ameritrade Holding at the current share price and the inputted number of shares is $20.1 billion.

RELATED COMPANIES Price Int.Val. Rating
SCHW Charles Schwab 39.27 107.58  str.buy
LPLA LPL Financial 45.82 54.58  buy
ETFC E*TRADE Financ 39.84 74.84  str.buy
MS Morgan Stanley 44.68 248.98  str.buy
IBKR Interactive Br 40.89 0.61  str.sell
RJF Raymond James 77.72 453.93  str.buy
SEIC SEI Investment 55.77 33.24  sell

COMPANY NEWS

▶ TD Ameritrade launches Facebook chatbot   [Aug-22-17 10:31AM  Reuters]
▶ TD Ameritrade Reports Monthly Metrics   [Aug-09-17 08:30AM  Business Wire]
▶ These Were The Most Bought And Sold Stocks In July   [Aug-07-17 04:32PM  Benzinga]
▶ Online Brokerage TD Ameritrade Innovates Faster Under CIO's Helm   [Jul-24-17 09:36AM  The Wall Street Journal]
▶ Benzinga's Option Alert Recap From July 19   [Jul-19-17 04:18PM  Benzinga]
▶ TD Ameritrade: The Ascent Continues   [08:48AM  Barrons.com]
▶ TD Ameritrade tops Street 3Q forecasts   [Jul-18-17 05:38PM  Associated Press]
▶ TD Ameritrade Stock Breaks Out As Q3 Beats; Schwab Meets   [04:07PM  Investor's Business Daily]
▶ Ameritrade Could Rally Like Its 1999   [03:14PM  TheStreet.com]
▶ TD Ameritrade to Host Earnings Conference Call   [Jul-12-17 08:30AM  Business Wire]
▶ TD Ameritrade Investor Movement Index: 2017 Mid-Year Review   [Jul-10-17 12:30PM  Business Wire]
▶ Which Stocks Are Showing Rising Relative Strength?   [Jun-12-17 01:47PM  Investor's Business Daily]
▶ TD Ameritrade Reports Monthly Metrics   [Jun-09-17 08:30AM  Business Wire]
▶ Teens Ready to Work This Summer   [08:30AM  Business Wire]
▶ 3 Top Dividend Stocks in FinTech   [May-20-17 08:28AM  Motley Fool]
▶ How to Read Traders Activities Using the COT Report   [May-16-17 06:05PM  Market Realist]
▶ TD Ameritrade Reports Monthly Metrics   [08:30AM  Business Wire]
▶ TD clients buying Amazon, Facebook, AT&T   [May-08-17 03:49PM  CNBC Videos]
▶ Mobile Trading Up 344 Percent Over Last 5 Years   [May-01-17 08:30AM  Business Wire]
▶ TD Ameritrade Announces Closing of Senior Notes Offering   [Apr-27-17 04:30PM  Business Wire]
▶ Brokerage pricing battle   [12:39PM  CNBC Videos]
▶ TD Ameritrade CEO on trade commissions   [03:33PM  CNBC Videos]
▶ Why is TD Ameritrade Rising?   [10:15AM  Barrons.com]
▶ TD Ameritrade posts 2Q profit   [07:41AM  Associated Press]
Stock chart of AMTD Financial statements of AMTD
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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