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E*TRADE’s (ETFC) January DARTs & New Brokerage Assets Fall

Zacks

E*TRADE Financial ETFC has reported a decline in Daily Average Revenue Trades (DARTs) for January 2019. Per its monthly market activity, DARTs came in at 282,499, down 9% from the previous month and 10% year over year. Derivatives comprised 33% of DARTs in January.

Broker performance is generally measured through DARTs that represent the number of trades from which brokers can expect commission or fees. Fall 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 7 million, comprising 4.9 million brokerage accounts, 1.8 million stock plan accounts and 0.3 million banking accounts.

For the reported month, E*TRADE’s total brokerage accounts included 48,211 gross new brokerage accounts. Total brokerage accounts highlight the company’s ability to gain and retain customers who trade and invest.

E*TRADE’s net new brokerage assets came in at $1.1 billion, down 50% from the prior month and 15% year over year.

At the end of January 2019, E*TRADE’s customer security holdings were $348 billion, up 10% from December 2018 and 14% from January 2018 levels. The company’s brokerage-related cash declined 1.1% from the previous month but increased 1.1% from January 2018 to $53.6 billion. In addition, bank-related cash and deposits for the company totaled $6.4billion, up 7% from the last month and 31% year over year.

Our Take

The uncertain macroeconomic environment is expected lead to lower trading activities, which will likely hamper growth in DARTs and new brokerage accounts. However, restructuring measures and balance-sheet growth plans along with higher interest rates will prove beneficial for the company.

Its shares have lost around 10% over the past three months compared with the 3.8% decline for the industry it belongs to.



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.

Peer Performance and Upcoming Releases

Interactive Brokers Group, Inc.’s IBKR Electronic Brokerage segment reported a year-over-year fall in DARTs for January 2019. Total client DARTs came in at 851,000, down 6% from January 2018 and 11% from December 2018.

Notably, Charles Schwab SCHW and LPL Financial Holdings Inc. LPLA are expected to release January monthly activity reports soon.

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