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E*TRADE Financial's (ETFC) July DARTs Decline 8% From June

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E*TRADE Financial has reported a rise in Daily Average Revenue Trades (DARTs) for July 2018. According to its monthly market activity, the company’s DARTs came in at 250,787, down 8% from the previous month, but up 20% year over year. Notably, derivatives comprised 34% of DARTs in July.

Broker performance is generally measured through DARTs that represent the number of trades from which brokers can expect commission or fees. The decline 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 5.9 million, comprising about 3.9 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 37,360 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 $0.5 billion compared with $1.5 billion recorded in the prior month.

At the end of July 2018, E*TRADE’s customer security holdings were $345.4 billion, up from the $337.6 billion reported in June. The company’s brokerage-related cash edged down slightly to $52.3 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 $4.9 billion, in line with the previous month.

Peer Performance

Interactive Brokers Group, Inc.’s (IBKR - Free Report) Electronic Brokerage segment reported a year-over-year decrease in DARTs for July. Total client DARTs were 748,000, decreasing 6% from June 2018, but increasing 8% from July 2017. Total customer accounts grew 27% year over year and 2% from the prior month to 555,000, in July 2018.

The Charles Schwab Corporation’s (SCHW - Free Report) monthly activity for July 2018 reflects year-over-year rise. Total client assets came in at $3.5 trillion at the end of the month, increasing 12% from the year-ago quarter. Further, client assets receiving ongoing advisory services were $1.8 trillion, up 15% year over year.

Among others, LPL Financial Holdings Inc. (LPLA - Free Report) is expected to release July monthly activity reports earlier next 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 #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The company’s shares have gained nearly 16.5% over the past six months compared with 8.7% decline recorded by the industry.



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