E*TRADE Financial (ETFC) August DARTs Down 1% From July

E*TRADE Financial Corporation (NASDAQ:ETFC) reported a decline in Daily Average Revenue Trades (DARTs) for August 2017. According to its monthly market activity, the company’s DARTs came in at 206,572, down 1% from the prior month, but up 44% year over year. Notably, derivatives comprised 31% of DARTs during August.

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 in investing in equity markets.

At the end of the month under review, E*TRADE’s total number of accounts were approximately 5.4 million, comprising about 3.6 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 40,831 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 $1.1 billion compared with $0.1 billion recorded in the prior month.

At the end of August 2017, E*TRADE’s customer security holdings were $267.3 billion, up from $260.9 billion in July 2017. The company’s brokerage-related cash declined marginally to $51.5 billion from $51.7 billion in the prior month, with customers being the net buyers of about $1.3 billion in securities. In addition, bank-related cash and deposits for the company totaled $5 billion, down from $5.1 billion witnessed in the previous month.

Peer Performance

Among other investment brokers, Interactive Brokers Group, Inc.’s (NASDAQ:IBKR) lectronic Brokerage segment reported a year-over-year increase in DARTs for August 2017. Total client DARTs were 696,000, up 21% from August 2016 and relatively stable with July 2017. Also, total customer accounts jumped 23% year over year and 3% from the prior month to 448,900.

TD Ameritrade Holding Corporation (NASDAQ:AMTD) , Omaha, NE-based online brokerage firm, reported average client trades per day of 504,000 in its activity report for August 2017. Though the reported figure is down 2% from the prior-month tally, it increased 19% from the year-ago period.

The Charles Schwab Corporation (NYSE:SCHW) released the monthly activity report for August 2017, which shows an improvement over the year-ago period. Total client assets were $3.1 trillion at the end of the month, up 15% year over year. Further, client assets receiving ongoing advisory services were $1.583 trillion, up 16% year over year. Also, Schwab’s average interest earning assets were $214.5 billion at August end, reflecting 10% increase on a year-over-year basis.

Our Viewpoint

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

E*TRADE currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The company’s shares gained 17.6% over the last six months compared with the loss of 3.8% incurred by the industry it belongs to.

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