TD Ameritrade's (AMTD) October Client Trades Surge 17% - Analyst Blog

Omaha, NE-based online brokerage firm TD Ameritrade Holding Corporation (AMTD) came out with its average client trades per day of 494,000 in its activity report for October. This jumped 17% from the prior month and 18% compared with the prior-year period.

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

As of Oct 31, 2014, TD Ameritrade reported $663.5 billion in total client assets, up 2% from the prior month and 16% year over year. Further, average spread-based balance of $95.3 increased 2% from the prior month and 6% year over year. Additionally, average fee-based balances were $147.5 million, up 2% from the prior month and 15% year over year.

Quarterly Performance

Average client trades per day in fiscal fourth-quarter 2014 increased 5.5% year over year to 402,638. For full-year fiscal 2014, average client trades per day increased 14.3% year over year to 426,888.

Further, at the end of the quarter, net new client assets stood at $13.4 billion, up 32.7% from the prior-year quarter end. For full-year 2014, the company's net new client assets stood at $53.4 billion, up 7.9% year over year. Notably, fiscal 2014 marked the “sixth consecutive year of double-digit asset gathering”.

At quarter end, TD Ameritrade reported total client assets of $653.1 billion, up 17.5% year over year. Moreover, average spread-based balance was $92.9 billion, increasing 4.6% year over year and average fee-based investment balance increased 17.7% to $144.0 billion.

Our Viewpoint

With gradually improving investors' confidence, firms like TD Ameritrade are expected to benefit. Also, the broader trend in the investment brokerage industry should help drive growth.

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 significantly drive organic growth.

Amid a volatile operating environment, TD Ameritrade witnessed a continuous rise in both organic client assets and trading volumes, which bode well going forward. However, we remain cautious as a continuous rise in expenses, a low interest rate environment and stringent regulations may weigh on the company's financials in the upcoming quarters.

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

Among other investment brokers, Interactive Brokers Group, Inc.'s (IBKR) Electronic Brokerage segment recorded a year-over-year increase in brokerage metrics for Oct 2014. Total customer Daily Average Revenue Trades (DARTs) were 680,000, up 33% from Oct 2013 and 18% from Sep 2014.

The Charles Schwab Corporation (SCHW) is expected to report its monthly metrics later this week.

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