Why Toronto-Dominion Bank Stock Trounced the Market Today

An encouraging quarterly earnings report was the catalyst sending Toronto-Dominion Bank's (NYSE: TD) stock higher on Thursday. It closed the trading session up by more than 3%, while the S&P 500 (SNPINDEX: ^GSPC) index essentially flatlined.

A double beat for quarter No. 2

Toronto-Dominion's total non-GAAP (generally accepted accounting principles) adjusted revenue for its fiscal second quarter of 2025 was slightly over 15.1 billion Canadian dollars ($10.9 billion), up from the CA$13.8 billion ($9.9 billion) it earned in the same frame of 2024. That was on the back of growth in both net loans and total assets, which rose by nearly 1% and almost 5% year over year, respectively.

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Adjusted net income went in the other direction, slipping to a bit over CA$3.6 billion ($2.6 billion) from the year-ago profit of almost CA$3.8 billion ($2.7 billion). The former figure was CA$1.97 ($1.42) on a per-share basis.

Both headline fundamentals comfortably beat the consensus analyst estimates. On average, professional researchers tracking Toronto-Dominion's stock were expecting CA$13.6 billion ($9.8 billion) for revenue, and a per-share, adjusted net income figure of CA$1.83 ($1.32).

In terms of its activities, the bank's largest -- Canadian personal and commercial banking -- saw a net income decline of 4%; it attributed this to higher provisioning for credit losses and noninterest expenses. Those operations saw a 3% increase in revenue, however.

Meanwhile, Toronto-Dominion's U.S. retail banking unit saw its adjusted net income fall by 16% in U.S. dollar terms. The company said this was due mainly to higher governance and control expenditures.

American struggles

On a more positive note, Toronto-Dominion did well with its wealth management and insurance, and wholesale banking divisions -- reported net income growth for the pair was 14% and 16%, respectively. Wealth management benefited from strong inflows from institutional clients, while the latter notched a new record for revenue.

Although the twin beats were satisfying, I think investors should be concerned with the company's struggles in the U.S. market. This will be the part of its operations to keep a sharp eye on going forward.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.