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TD Ameritrade's (AMTD) April Client Trades Improve Y/Y

Omaha, NE-based online brokerage firm TD Ameritrade Holding Corporation AMTD reported average client trades of 470,000 per day in its activity report for Apr 2016. This marks a 3% rise from the prior-year period and 2% from the previous month.

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

As of Apr 30, 2016, TD Ameritrade reported $719 billion in total client assets, up 2% from the prior-year period and 1% from the preceding month. Average spread-based balance of $106.2 billion reflected an increase of 12% year over year and was in line with the prior-month figure.

Further, average fee-based balances were $161.6 billion, up 1% from the prior-year period and 3% from the preceding month.

Quarterly Performance

During fiscal second-quarter 2016 (ended Mar 31), average client trades per day increased 6.9% year over year to 509,120. Notably, net new client assets totaled $14.1 billion, down 13.5% year over year. However, total client assets came in at $711.2 billion, up 2.3% year over year.

Average spread-based balance was $105.8 billion, increasing 12.2% year over year and average fee-based investment balance edged down 1.3% to $153.1 billion.

Our Viewpoint

Innovations in online trading, long-term investment in products and services, delivery of advanced customer service and creative marketing and sales are TD Ameritrade’s key strategies to boost its trading and investing business. Further, we believe the company will benefit from the renewed interest of retail investors in the equity market.

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 organic client assets, which bodes well for the future. However, we remain cautious as a continuous rise in expenses, margin pressure 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 reported total client Daily Average Revenue Trades (DARTs) of 662,000 for Apr 2016, up 5% from Apr 2015 and 1% from the previous month. Further, total customer accounts were 349,000, up 15% from Apr 2015 and 1% from the preceding month.

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

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