Brokerages Weekly Review: Asset Base Continues To Grow For ETFC, AMTD, SCHW

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ETFC: E*TRADE Financial logo
ETFC
E*TRADE Financial

TD Ameritrade (NYSE:AMTD), E*Trade Financial (NASDAQ:ETFC) and Charles Schwab (NYSE:SCHW) released their monthly volume figures for the month of August earlier this week. It was a positive month for all three in terms of trading activity, which had been low for the few months after a strong start to 2014. Although the average trades per day during August were lower than July levels, they were flat on a year-on-year basis for the first time since April. Moreover, the brokerages reported a continued increase in their respective client assets under management. The companies’ stocks rose by 2-4% in the second half of the week following the release of their respective monthly figures. Here’s a quick roundup on the individual metrics and August performance for the brokerage firms.

TD Ameritrade

TD Ameritrade’s trading volume was similar to August 2013 with an average of 381,000 trades per day. This was an improvement from the months of May, June and July, when the average trades per day were down on a year-on-year (y-o-y) basis by 8%, 6% and 8%, respectively. Ameritrade’s interest earning assets grew both sequentially (2%) and annually (16%) to $19.4 billion, continuing the trend from the previous twelve months. Additionally, its Insured Deposit Account (IDA) balances also grew sequentially (2%) and annually (4%) to $74.1 billion. Ameritrade’s total client assets were up to $665 billion from $530 billion in August last year. [1]

  • Trefis has a $33 price estimate for Ameritrade’s stock, implying a market cap of $18.1 billion. This is slightly lower than the current market price which rose slightly over the week.
  • We estimate the company’s 2014 revenues to be around $3.2 billion and an earnings per share of $1.82 in FY 2015 ending September, compared to a consensus of $1.70 according to Reuters.
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See our full analysis for TD Ameritrade

E*Trade Financial

E*Trade witnessed a similar improvement in trading activity. Although the daily average revenue trades (DARTs) for the month of August were 5% lower than July levels at 146,000 trades per day, they were nearly the same as the year ago period. The brokerage successfully opened over 13,000 net new accounts in August, which was higher than the 10,000 net new accounts added in June and July combined. Consequently, E*Trade’s client assets rose by 11.4% y-o-y to $41 billion. [2] E*Trade’s total client assets (customer assets in brokerage accounts and banking accounts combined) were up to $290 billion from $232 billion in the year ago period.

  • Trefis has a $21 price estimate for E*Trade’s stock, translating into a $6.1 billion market cap. This is about 10% below the market price, which also rose slightly over the week.
  • We estimate the company’s revenues to be over $1.8 billion and earnings per share of $1.24 in 2014, compared to a consensus of $1.02 according to Reuters.

See our full analysis for E*Trade Financial

Charles Schwab

Charles Schwab’s daily average trades were flat over the prior year and July levels at 460,000 trades per day. The company added 19,000 net new accounts in August taking the total number of active brokerage accounts to just under 9.3 million. Schwab’s total client assets under management neared the $2.5 trillion mark, up from just over $2 trillion in August 2013. We currently forecast Schwab’s total client assets to breach the $2.5 trillion mark before the end of the year. [3]

  • Trefis has a $27 price estimate for Charles Schwab, translating into a $35.1 billion market cap. This is about 10% lower than the current market price.
  • We estimate the company’s 2014 revenues to be $6.4 billion and earnings per share of $1.14, compared to a consensus of $1.00 according to Reuters.

See our full analysis for Charles Schwab

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Notes:
  1. Ameritrade Monthly Metrics For August, TD Ameritrade Investor Relations, September 2014 []
  2. E*Trade Monthly Metrics For August, E*Trade Investor Relations, September 2014 []
  3. Charles Schwab Monthly Metrics For August, Charles Schwab Investor Relations, September 2014 []