TD Ameritrade's Client Trades Up 17% - Analyst Blog

Omaha, NE-based online brokerage firm TD Ameritrade Holding Corporation (NYSE: AMTD) stated average client trades per day of 448,000 in its Activity Report for Apr 2014. This figure was up 17% year over year while it increased 7% sequentially.

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 $619.9 billion in total client assets in Apr 2014, up 18% year over year while it remained stable with the prior month. Moreover, average spread-based balances augmented 10% year over year to $91.3 while it remained stable sequentially.

Further, average fee-based balances climbed 17% year over year to $136.0 billion, while it came in line with the Mar 2014 figure.

Quarterly Performance

Average client trades per day in second-quarter fiscal 2014 (ended Mar 2014) increased 30.1% year over year to 491,963. However, net new client assets were $12.2 billion, down 5.4% from the past year.

At quarter end, TD Ameritrade reported total client assets worth $617.1 billion, up 19.4% year over year. Moreover, average spread-based balance was $91.5 billion, up 10.8% from $82.6 billion in the prior-year quarter. Average fee-based investment balance was $133.6 billion, up 20.5% year over year.

Our Viewpoint

As investors' confidence has been improving at a modest level recently, we expect firms like TD Ameritrade will continue to benefit from the broader trend in the investment brokerage industry.

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 (NYSE: 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, mounting expenses, a volatile operating scenario and stringent regulations may pose challenges to the company's financials in the long run.

At present, TD Ameritrade carries a Zacks Rank #3 (Hold).

Among other investment brokers, Interactive Brokers Group, Inc.'s (NASDAQ: IBKR) Electronic Brokerage segment recorded a year-over-year rise in brokerage metrics for Apr 2014. Total customer Daily Average Revenue Trades (DARTs) were 576,000, up 20% from Apr 2013 but down 1% from 583,000 in Mar 2014.

The Charles Schwab Corp. (NYSE: SCHW) is expected to report their monthly metrics later this week.