Markets

E*TRADE Financial (ETFC) November DARTs Rise 3% Q/Q

Online brokerage firm, E*TRADE Financial CorporationETFC reported a jump in its Daily Average Revenue Trades (DARTs) for November 2015. According to the monthly market activity report for November, E*TRADE's DARTs were 148,777, up 3% from the prior month but down 9% on a year-over-year basis.

Broker performance is generally measured through DARTs that represent the number of trades from which brokers can expect commissions or fees. The rise in DARTs largely reflects investors' keenness in investing in equity markets.

At the end of the month under review, E*TRADE's total number of accounts came in at approximately 4.9 million, of which about 3.2 million are brokerage accounts, 1.4 million are stock plan accounts and 0.3 million are banking accounts.

For the reported month, E*TRADE's total brokerage accounts included 27,698 gross new brokerage accounts. Notably, net new brokerage accounts were 7,255. Total brokerage accounts reflect the company's ability to attract and retain customers who trade and invest.

Moreover, E*TRADE's net new brokerage assets were $1 billion, up from $0.5 billion in the prior month.

As of November-end, E*TRADE's customer security holdings were $211.2 billion, slightly up from the prior month. The company's brokerage-related cash increased by $0.7 billion to $41.7 billion, with customers being the net buyers of about $0.2 billion in securities. Moreover, bank-related cash and deposits for the company stood at $5.3 billion, in line with the prior month.

Peer Performance

Among other investment brokers, Interactive Brokers Group, Inc.'s IBKR Electronic Brokerage segment reported a year-over-year improvement in its brokerage metrics for November 2015. Total client DARTs were 640,000, up 11% from November 2014, but down 2% from October 2015. Further, total customer accounts were 329,100, up 18% from the prior-year month and 1% from the preceding month.

Online brokerage firm - TD Ameritrade Holding Corporation AMTD came out with its average client trades per day of 438,000 in its activity report for November 2015. This increased 1% from the prior month and 2% compared with the prior-year period.

The Charles Schwab Corporation SCHW released its monthly activity report for November 2015. The company recorded net new assets (bought by existing as well as new clients) of $17.2 billion, up 58% from the prior-year month and 64% from the preceding month.

Our Viewpoint

Amid the challenging economy, increase in DARTs and new brokerage accounts will be beneficial for the company. 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. We remain encouraged by the brokerage firm's restructuring moves and several other efforts including revamping its brand, launching new products and services and improving its technology space to offer a better digital experience to customers.

E*TRADE currently carries a Zacks Rank #1 (Strong Buy).

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E TRADE FINL CP (ETFC): Free Stock Analysis Report

SCHWAB(CHAS) (SCHW): Free Stock Analysis Report

INTERACTIVE BRK (IBKR): Free Stock Analysis Report

TD AMERITRADE (AMTD): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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