Brokerages Weekly Notes: Trade Volumes Surge In August For E*Trade, TD Ameritrade, Charles Schwab

Charles Schwab (NYSE:SCHW), TD Ameritrade (NYSE:AMTD) and E*Trade Financial (NASDAQ:ETFC) recently released their monthly volume figures for the month of August. After a period of relatively subdued mid-year trading activity, volumes picked up significantly through August. Correspondingly, the brokerage firms continued to add total client assets under management. The yield on client assets is likely to pick up in late 2015 after relatively flattish yields through the first half of the year, as interest rates are expected to rise. ^{[1]  [2]}

The stocks of these three brokerages fell by about 4-6% last week. Comparatively, the Dow Jones U.S. Financials Index and Dow Jones Financial Services Titans 30 Index both fell by about 1% through the week. Both these indices have fallen by over 7% since the beginning of the year. Here’s a quick roundup on the individual metrics and August performance for the brokerage firms.

TD Ameritrade

TD Ameritrade’s trading volume stood at 537,000 trades per day in August, up from 455,000 trades per day in July and 434,000 trades per day through the June quarter. ^[3] Moreover, August volumes were 41% higher than August 2014 volumes. Ameritrade’s Insured Deposit Account (IDA) balances were 5% higher than the year ago period and about 1.5% higher on a month-over-month basis to $77.9 billion. Similarly, its interest-earning assets were about 10% higher than the prior year period at $21.4 billion in August. Ameritrade’s total client assets rose annually by about 2% annually to $679.1 billion.

• Trefis has a $34 price estimate for Ameritrade’s stock, implying a market cap of $18.7 billion. This is roughly in line with the current market price.
• Ameritrade’s stock price fell by about 5% last week and by 10% since the beginning of the year.
• We currently forecast Ameritrade’s full year revenues for the calendar year 2015 to be around $3.38 billion and an EPS of $1.49 for FY 2015 ended September, compared to a Reuters consensus of $1.48.

See our full analysis for TD Ameritrade

Charles Schwab

Charles Schwab averaged about 355,000 revenue trades per day in August, significantly higher than 286,000 trades per day in July. Comparatively, daily average revenue trades (DARTs) through the first half of the year stood at about 287,000 trades per day. ^[4]. The brokerage added 40,000 net new accounts in August, taking the total number of active brokerage accounts to over 9.67 million. Schwab has added about 264,000 net new accounts since the beginning of the year. The total client assets under management at Schwab stood at over $2.56 trillion at the end of July, up from $2.46 trillion at the beginning of the year. However, total client assets fell to $2.46 trillion by the end of August. ^[5]

• Trefis has a $30 price estimate for Charles Schwab, translating into a $38.9 billion market cap. This is in line with the current market price.
• Schwab’s stock price fell by about 7% last week.
• We currently forecast Schwab’s full year revenues to be around $6.96 billion and an EPS of $1.14, compared to the Reuters’ consensus EPS of $1.02.

See our full analysis for Charles Schwab

E*Trade Financial

E*Trade’s DARTs for the month of August were up both sequentially (+21%) and year-over-year (+23%) to nearly 180,000 trades per day. E*Trade added over 14,000 net new accounts on its trading platforms in August and over 60,000 accounts since the beginning of this year. The total client assets at E-Trade stood at $46.3 billion through August, roughly flat over the year ago period. ^[6] Similarly, E*Trade’s total client assets (customer assets in brokerage accounts and banking accounts combined) stood at $287 billion, also flat over the comparable prior year period.

• Trefis has a $24 price estimate for E*Trade’s stock, translating into a $7.1 billion market cap. This slightly lower than the market price.
• E*Trade’s stock price fell by about 4% last week, but is up by over 8% since the beginning of the year.
• We forecast E*Trade’s full year revenues to be about $1.89 billion and EPS of $1.11, compared to a Reuters’ consensus EPS of $1.14.

See our full analysis for E*Trade Financial

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1. Janet Yellen says interest rate hike ‘will be appropriate’ later this year, The Guardian, May 2015 [↩]
2. Yellen points to gradual rate rises, Financial Times, June 2015 [↩]
3. Ameritrade Monthly Metrics, Ameritrade Investor Relations, September 2015 [↩]
4. Charles Schwab Corporation Recent Client Trading Activity Report, Charles Schwab Investor Relations, September 2015 [↩]
5. Schwab Monthly Metrics for August, Charles Schwab Investor Relations, September 2015 [↩]
6. E*Trade Monthly Metrics For August, E*Trade Investor Relations, September 2015 [↩]