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Analyst Blog

Last week, TD Ameritrade Holding Corporation (AMTD - Analyst Report) – an online brokerage firm – reported a rise in average client trades from the prior year in its Activity Report for the month of Jul 2013. However, U.S. trades fell 6% from the prior month levels.

For the reported month, average client trades were 373,000, up 12% year over year. The rise in client trades largely resulted from a resurgence in the equity markets.

For the month, TD Ameritrade reported $544.2 billion in total client assets, up 21% year over year and 4% from the prior month. Moreover, average spread-based balances increased 18% year over year to $88.2 billion. Further, these balances nudged up 1% from Jun 2013.

At July-end, average fee-based balances were recorded at $120.6 billion, rising 33% year over year and 2% from the prior month.

Quarterly Performance

As of Jun 30, 2013, average client trades per day increased 12% year over year to 399,216. Net new client assets were $10.8 billion, up 11% from $9.7 billion in the past year.

At the end of June, TD Ameritrade reported total client assets worth $523.5 billion, up 18% year over year. Moreover, average spread-based balance was $84.7 billion, up 14% from $74.2 billion in the prior-year quarter. Average fee-based balance was $118.1 billion, up 34% year over year.

Our Viewpoint

Innovations in online trading, long-term investment in products and services, delivery of advanced customer service, creative as well as cost-effective marketing and sales, along with prudent expense management are the key factors behind TD Ameritrade’s strategy of boosting its trading and investing business.

Further, the company’s association with The Toronto-Dominion Bank (TD - Snapshot Report) provides an opportunity to cross-sell its products. This is expected to be a significant growth driver for TD Ameritrade’s organic assets.

Amid a volatile operating environment, TD Ameritrade witnessed a rise in both organic client assets and trading volumes, which will benefit the company. However, a low interest rate environment and stringent regulations will likely be dampeners.

TD Ameritrade currently carries a Zacks Rank #1 (Strong Buy). Other financial stocks that carry the same Zacks Rank as TD Ameritrade include GAIN Capital Holdings, Inc. (GCAP - Snapshot Report) and Provident Financial Holdings, Inc. (PROV - Snapshot Report).

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