PJC Piper Jaffray Companies

TD Ameritrade Holding Corporation (AMTD) – an online brokerage firm – reported marginally lower U.S. trades in its Activity Report for the month of Feb 2013. Moreover, on a year-over-year basis, the U.S. trades were down 6%.

For the reported month, Daily Average Revenue Trades (DARTs) were 386,000 compared with 387,000 in the prior month. The fall in DARTs primarily resulted from lower trading in the equity markets.

Broker performance is generally measured through DARTs from which brokers can earn commissions or fees.

TD Ameritrade reported $502.5 billion in total client assets in February, up 14% year over year and 1% from the prior month. Moreover, average spread-based balances augmented 11% year over year to $81.8 billion. However, these balances inched down 2% from Jan 2013.

At the end of February, average fee-based balances stood at $110.8 billion, up 30% year over year and 3% from the last month.

Quarterly Performance

As of Dec 31, 2012, DARTs decreased 9% year over year to 334,035. Net new client assets reported were $15.6 billion, up 53% from $10.2 billion a year ago.

For the quarter, TD Ameritrade reported $480.8 billion in total client assets, up 18% year over year. Moreover, average spread-based balance was $79.3 billion, up 9% from $72.6 billion in the prior-year quarter. Average fee-based balances surged 28% year over year to $100 billion.

Our Viewpoint

The competitive position of brokerage business in the market depends on trading customers with emphasis on active traders. As the long-term investing customer group is less developed compared to trading customers, there is an opportunity for future growth in case the long-term customer base expands.

Development of innovative ways for online trading and long-term investing products and services, delivery of advanced customer service, creative and cost-effective marketing and sales, as well as expense discipline can be considered as the key factors behind TD Ameritrade’s strategy of boosting its trading and investing business.

Amid a volatile operating environment, TD Ameritrade witnessed a decline in organic client asset. The company also reported waning trading volumes and therefore a significant turnaround remains elusive. Further, a low interest rate environment is a matter of concern.

TD Ameritrade currently retains a Zacks Rank #2 (Buy). Other brokerage firms that are also performing well include Evercore Partners Inc. (EVR), Knight Capital Group Inc.
(KCG) and Piper Jaffray Companies (PJC). All these stocks carry a Zacks Rank #1 (Strong Buy).
 

 
TD AMERITRADE (AMTD): Free Stock Analysis Report
 
EVERCORE PARTNR (EVR): Free Stock Analysis Report
 
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PIPER JAFFRAY (PJC): Free Stock Analysis Report
 
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