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.

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.