E*TRADE's (ETFC) October DARTs Increase 7% From September

E*TRADE Financial (NASDAQ:ETFC) has reported a rise in Daily Average Revenue Trades (DARTs) for October 2018. According to its monthly market activity, the company’s DARTs came in at 301,625, up 7% from the previous month, and 40% year over year. Notably, derivatives comprised 32% of DARTs in October.

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

At the end of the month under review, E*TRADE’s total number of accounts were approximately 6 million, comprising about 4 million brokerage accounts, 1.7 million stock plan accounts and 0.3 million banking accounts.

For the reported month, E*TRADE’s total brokerage accounts included 46,760 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 $1.2 billion compared with $1 billion recorded in the prior month.

At the end of October 2018, E*TRADE’s customer security holdings were $338.7 billion, down from the $364.2 billion reported in September. The company’s brokerage-related cash edged down 4% to $51.4 billion, compared with the prior month, with customers being the net buyers of about $2.7 billion in securities. In addition, bank-related cash and deposits for the company totaled $5.3 billion, up from $5.1 billion in the last month.

Peer Performance

Interactive Brokers Group, Inc.’s (NYSE:IBKR) Electronic Brokerage segment reported a year-over-year increase in DARTs for October. Total client DARTs were 986,000, increasing 22% from September 2018 and 41% from October 2017. Total customer accounts grew 26% from the prior-year month and 2% from the last month to 585,100.

The Charles Schwab Corporation’s (NYSE:SCHW) monthly activity for October 2018 reflects year-over-year growth. Total client assets came in at $3.4 trillion at the end of the month, increasing 4% from the year-ago quarter. Furthermore, client assets receiving ongoing advisory services were $1.5 trillion, up 7% year over year.

Among others, LPL Financial Holdings Inc. (NASDAQ:LPLA) is expected to release October 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 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 have gained nearly 4.1% year to date compared with the 13.7% decline recorded by the industry.

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