TD Ameritrade's Client Trades Scale New High - Analyst Blog

Omaha, Nebraska-based online brokerage firm TD Ameritrade Holding Corporation AMTD stated a whooping monthly average client trades per day of 501,000 in its Activity Report for Feb 2014. This figure marked an all-time high in the company's trading history.

Further, the trading metrics look impressive as it continues to deliver an improved performance. The figure represents a 1% rise, breaking the previous record of 496,000 in the prior month, while it rose 30% year over year.

Broker performance is generally measured through monthly average client trades per day.  It represents the number of trades from which brokers can earn commissions or fees.

TD Ameritrade reported $611.6 billion in total client assets in Feb 2014, up 22% year over year and 4% from the prior month. Moreover, average spread-based balances augmented 12% year over year to $91.7 while it was in line with Jan 2014.

Further, average fee-based balances climbed 19% year over year to $132.4 billion, while it came in line with the Jan 2014 figure.

Quarterly Performance

Average client trades per day in first-quarter fiscal 2014 (ended Dec 2013) increased 24% year over year to 414,000. However, net new client assets were $14.5 billion, down 7% from the past year.

At quarter end, TD Ameritrade reported total client assets worth $596.5 billion, up 24% year over year. Moreover, average spread-based balance was $90.3 billion, up 14% from $79.3 billion in the prior-year quarter. Average fee-based balance was $130.5 billion, up 31% year over year.

Our Viewpoint

Innovations in online trading, long-term investment in products and services, delivery of advanced customer services, creative as well as cost-effective marketing and sales, along with prudent expense management are TD Ameritrade's key strategies to boost its trading and investing business.

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

However, amid a volatile operating scenario, a low interest rate environment and stringent regulations may pose challenges to the company's financials in the long run.

At present, TD Ameritrade carries a Zacks Rank #1 (Strong Buy).

Among other investment brokers, The Charles Schwab Corp. SCHW and E*TRADE Financial Corp. ETFC are expected to report their monthly metrics later this week.