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"AmeriTrade ( AMERITRAD HLD A ) stock continues its ascent
NEW YORK, March 5 (Reuter) - Shares of discount securities broker AmeriTrade Holding Corp ( AMERITRAD HLD A ) stayed on their upward track on the company's second day of trading, rising another two points from Tuesday's close of 19-1/2.
CS First Boston was lead underwriter on the 2.35 million share deal, which priced at $16 a share.
Vincent Slavin, who tracks initial public offerings for Cantor Fitzgerald, said he was taken aback by the run-up in the stock.
"I'm very surprised," he said and added that he believed much of the push was coming from a Jersey City-based dealer called
Troster Singer. "It appears to be that they've been the primary buyer," he said. Officials at Troster could not be reached for comment.
Slavin had assigned an "A" rating to the deal, which translated into a premium expectation, at the open, of about one point.
AmeriTrade opened at 16-3/4.
Kathleen Smith, analyst at IPO research firm Renaissance Capital Corp, said she liked the deal very much. "The valuation was very attractive and still is," she said.
Comparing AmeriTrade's valuation to one of its competitors, E *Trade Group Inc ( E Trade Group Inc ), Smith calculated that, while E *Trade's stock trades at about 12 times the company's latest 12 month sales, AmeriTrade was currently trading at roughly 5.9 times the latest 12 month sales.
This was an attractive comparative valuation, despite the fact that E *Trade was a faster growing company, she said.
Online brokerage service E *Trade has seen its stock rise from $10.50 at the time it went public in August, to 25-1/4 on Wednesday.
AmeriTrade had total revenues of $65.4 million and earnings per share of $0.87 for the year ended September 27, 1996, compared with total revenues of $42.9 million and EPS of $0.55 in the prior year.
For the quarter ended December 31, 1996, the company's total revenues were $19 million and it made a loss per share of $0.01. In its filing, the company attributed the loss to increased expenditure on advertisement.
Smith, while agreeing that margins would be affected in the near term by marketing expenses, said that "in this industry the customer retention rate is high...it pays to advertise".
Much of AmeriTrade's strength, according to Steve Harmon, senior investment analyst at Mecklermedia's iWorld, lay in its established name and the variety of services it offered.
"They've been around and have a proven business model," he said. Given the company's diverse basket of services, it was better hedged against trouble than others Harmon said. The firm's move to the internet "is a complement to what they're already doing...they're not giving up anything," he said.
The 26-year old company, which operates under the names Accutrade, K.Aufhauser, Ceres and eBroker, provides retail brokerage services through a variety of mediums and also provides clearing and execution services. According to its prospectus, about 19 percent of its transactions were generated over the Internet during the quarter ended December 31, 1996..." [end]
other: J Ricketts, Chmn (NASDAQ:AMTD) is a controlling shareholder of Telescan (NASDAQ:TSCN) telescan.com wallstreetcity.com ref/TSCN fiscal 1996 SEC Form 10K
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