Online brokerage firm
) reported a fall in its Daily Average Revenue Trades (DARTs) for
May 2014. E*TRADE reported May DARTs of 147,661, down 13.8% from
Apr 2014 and 9.4% year over year.
Broker performance is generally measured through DARTs,
representing the number of trades from which brokers can expect
commissions or fees.
At May end, E*TRADE's total number of accounts came in at
approximately 4.7 million - consisting of 3.1 million brokerage
accounts, 1.2 million stock plan accounts and 0.4 million banking
For the reported month, E*TRADE's total brokerage accounts included
29,571 gross new brokerage accounts. Moreover, E*TRADE's net new
brokerage assets were $1.2 billion, increasing from negative $0.7
billion in the prior month. Total brokerage accounts reflect the
company's ability to attract and retain customers who trade and
During the month of May, E*TRADE's customer security holdings were
$191.8 billion, up 2.1% from the prior month. The company's
brokerage-related cash increased by $1.1 billion to $39.9 billion,
with customers being the net sellers of about $0.5 billion
securities. However, bank-related cash and deposits for the company
remained unchanged at $6.1 billion.
Amid the challenging economy, decrease in DARTs and gross brokerage
accounts is a matter of concern for E*TRADE. However, the company's
initiatives to reduce balance sheet risk appear to be promising,
although they will put near-term pressure on net interest margin.
Moreover, the company's decision to emphasize more on its core
businesses is a good sign.
We remain concerned about the sluggish macroeconomic environment,
which might lead to lower trading activities. Also, mounting
expenses and fluctuating interest rates are expected to impact the
company's financials in the near term.
Earlier, in its Activity Report for May,
Interactive Brokers Group, Inc.
) Electronic Brokerage segment charted a 2.0% rise in daily average
revenues trades from May 2013. This figure was, however, 10.0% down
from its prior-month figure. Interactive Brokers currently carries
a Zacks Rank #2 (Buy).
E*TRADE holds a Zacks Rank #2 (Buy). Better-ranked investment
Arlington Asset Investment Corp.
Piper Jaffray Companies
). Both of these sport a Zacks Rank #1 (Strong Buy).
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