E*TRADE Financial (ETFC) April DARTs Down 12% From March

E*TRADE Financial (NASDAQ:ETFC) reported a fall in Daily Average Revenue Trades (DARTs) for April 2018. According to its monthly market activity, the company’s DARTs came in at 249,939, down 12% from the prior month, but improved 28% year over year. Notably, derivatives comprised 35% of DARTs in April.

Broker performance is generally measured through DARTs that represent the number of trades from which brokers can expect commission or fees. The fall in DARTs largely reflects investors’ reluctance to invest in equity markets.

At the end of the month under review, E*TRADE’s total number of accounts were approximately 5.7 million, comprising about 3.9 million brokerage accounts, 1.5 million stock plan accounts and 0.3 million banking accounts.

For the reported month, E*TRADE’s total brokerage accounts included 188,056 gross new brokerage accounts. Total brokerage accounts highlight the company’s ability to gain and retain customers who trade and invest.

Moreover, E*TRADE’s net new brokerage assets came in at $18.2 billion compared with $1.8 billion recorded in the prior month.

At the end of April 2018, E*TRADE’s customer security holdings were $317.1 billion, up from the $296 billion reported in March 2018. The company’s brokerage-related cash remained stable at $51.9 billion, compared with the prior month, with customers being the net buyers of about $0.9 billion in securities. In addition, bank-related cash and deposits for the company totaled $4.7 billion, down from $5 billion reported in the previous month.

Peer Performance

Interactive Brokers Group, Inc.’s (NASDAQ:IBKR) Electronic Brokerage segment reported a year-over-year increase in DARTs for April 2018. The segment deals in clearance and settlement of trades for individual and institutional clients globally. Total client DARTs came in at 812,000, surging 26% from April 2017 but down 10% from March 2018.

The Charles Schwab Corporation (NYSE:SCHW) released the monthly activity report for April 2018, which shows an improvement from the year-ago period. Total client assets were $3.31 trillion at the end of the month, jumping 12% year over year. Further, new brokerage accounts came in at 141,000, up 13% year over year.

Among others, LPL Financial Holdings Inc. (NASDAQ:LPLA) is expected to release April monthly activity reports later this week.

Our Viewpoint

Growth in DARTs and new brokerage accounts will prove beneficial for the company. We, however, are concerned about the uncertain macroeconomic environment, which might lead to lesser trading activities.

E*TRADE currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The company’s shares have gained nearly 46% over the last six months compared with 17.5% growth recorded by the industry.

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