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E*TRADE Financial (ETFC) February DARTs Increase 33% Y/Y

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E*TRADE Financial Corporation reported a rise in its Daily Average Revenue Trades (DARTs) for Feb 2017. According to its monthly market activity, the company’s DARTs were 218,964, up 9% from the prior month and 33% year over year. Notably, derivatives comprised 28% of DARTs during February.

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 in investing in equity markets.

At the end of the month under review, E*TRADE’s total number of accounts were approximately 5.3 million, comprising about 3.5 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 45,767 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 $1.8 billion, compared with $0.8 billion in the prior month.

At the end of Feb 2017, E*TRADE’s customer security holdings were $241.2 billion, up from $231.4 billion in Jan 2017. The company’s brokerage-related cash climbed 3% to $53.2 billion from $51.8 billion in the prior month, with customers being the net buyers of about $0.3 billion in securities. Moreover, bank-related cash and deposits for the company totaled $5.3 billion, up from $5.2 billion in the previous month.

Peer Performance

Among other investment brokers, Interactive Brokers Group, Inc.’s (IBKR - Free Report) Electronic Brokerage segment reported a year-over-year fall in DARTs for Feb 2017. Total client DARTs were 678,000, down 12% from Feb 2016. However, DARTs were up 5% from Jan 2017.

TD Ameritrade Holding Corporation (AMTD - Free Report) came up with average client trades per day of 534,000 in its activity report for Feb 2017. The reported figure increased 2% from the prior month and 5% on a year-over-year basis.

The Charles Schwab Corporation (SCHW - Free Report) released the monthly activity report for Feb 2017, which shows an year-over-year improvement. Total client assets were $2.9 trillion at the end of the month, up 19% year over year. Further, client assets receiving ongoing advisory services were $1.47 trillion, up 20% year over year.

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 #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The company’s shares gained 26.2% over the last six months, underperforming the 40.7% growth for the Zacks categorized Investment Bank industry.



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