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E*TRADE Financial (ETFC) July DARTs Decline Sequentially


E*TRADE Financial Corporation ETFC reported a sequential decline in its Daily Average Revenue Trades (DARTs) for July 2017. According to its monthly market activity report, the company’s DARTs were 208,156, down 3% from the prior month but up a staggering 42% year over year. Notably, derivatives comprised 34% of DARTs for July.

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 toward equity markets.

At the end of the reported month, 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.

E*TRADE’s total brokerage accounts included 29,287 gross new brokerage accounts for the month. 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 $0.1 billion compared with $1.4 billion recorded in the prior month.

At the end of July 2017, E*TRADE’s customer security holdings were $260.9 billion, up from $255.3 billion in June 2017. The company’s brokerage-related cash remained flat at $51.7 billion compared with the prior month, with customers being the net buyers of about $0.1 billion in securities. In addition, bank-related cash and deposits for the company totaled $5.1 billion, flat with the previous month.

Peer Performance

Among other investment brokers, Interactive Brokers Group, Inc.’s IBKR Electronic Brokerage segment reported a year-over-year increase in DARTs for July 2017. Total client DARTs were 694,000, up 15% from July 2016. Also, DARTs were up from the previous month by 2%. Further, total customer accounts were up 21% year over year and 2% sequentially to 436,200.

TD Ameritrade Holding Corporation AMTD reported average client trades per day of 514,000 in its activity report for July 2017. The reported figure was flat with the prior-month tally and increased 13% from the year-ago period.

The Charles Schwab Corporation SCHW is expected to release its monthly activity report in the coming days.

Our Viewpoint

Year-over-year growth in DARTs and new brokerage accounts will prove beneficial for the company. However, intense competition related to trading price cuts with other renowned companies remain near-term headwind.

The company’s shares gained 11% over the last six months versus the industry’s loss of 2.6%.

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

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