Online brokerage firm
E*TRADE Financial Corporation
) reported a hike in its Daily Average Revenue Trades (DARTs) for
the month of November 2012. According to the monthly market
activity report for November, E*TRADE's DARTs were 130,202,
improving 5% from October 2012, but declining 8% from November
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Broker performance is generally measured through the DARTs that
represent the number of trades from which brokers can expect
commissions or fees. The fall in DARTs largely resulted from the
uncertain economic recovery and investors' reluctance to invest
in the equity markets.
At the end of the month, E*TRADE's total number of accounts came
in at approximately 4.5 million, of which about 2.9 million are
brokerage accounts, 1.1 million are stock plan accounts and 0.4
million are banking accounts.
For the reported month, E*TRADE's total brokerage accounts
included 26,312 gross new brokerage accounts and net new
brokerage accounts of 7,361. Moreover, net new brokerage assets
were $0.8 billion, rising from $0.3 billion in the prior month.
Total brokerage accounts and net new brokerage accounts reflect
the company's ability to attract and retain customers who trade
During the month, E*TRADE's customer security holdings were
$139.9 billion, up 0.9% from the prior month. Further,
brokerage-related cash moved up marginally by 0.6% from last
month to $31.9 billion, with customers being the net buyers of
about $0.3 billion in securities. Moreover, bank-related cash and
deposits remained stable from October 2012 and ended the month at
For the month under review, total special mention delinquencies
(30 to 89 days delinquent) edged up 3% from September 2012, but
declined 2% from the prior month to $338 million in E*TRADE's
entire loan portfolio. Total "at risk" delinquencies (30 to 179
days delinquent) inched up 2% from September 2012 and dropped 2%
from the prior month to $514 million.
TD Ameritrade Holding Corporation
) - an online brokerage firm - reported a 3% rise in average U.S.
trades in its Activity Report for the month of November 2012.
However, the U.S. trades declined 10% on a year-over-year basis.
For the reported month, Daily Average Revenue Trades (DARTs) were
341,000, up from 330,000 recorded in the prior month. The rise in
DARTs largely resulted from the improvement in equity markets.
Amidst the challenging economy, rising DARTs and new brokerage
accounts will be beneficial to the company. However, we
remain concerned about the sluggish macroeconomic environment,
which might lead to lower trading activities. Moreover,
fluctuating interest rates are expected to continuously impact
the company's financials in the near term.
However, E*TRADE's initiatives to reduce balance sheet risk
appear to be promising, although they will put near-term pressure
on the net interest margin. Moreover, its expense discipline and
better capital position are impressive and will likely aid the
company navigate through the current cycle.
E*TRADE currently retains a Zacks #3 Rank, which translates into
a short-term Hold rating.