StockBrokers.com continues to keep a close eye on the publicly-traded online brokers quarterly earnings reports each quarter. The fourth quarter earnings releases are now complete. Which companies were better able to navigate through another difficult environment for online brokers? We’ll break down some fast facts about each company’s report, and examine what it might mean for the industry. Let’s take a look at results from E*TRADE (ETFC), TD Ameritrade (AMTD), Charles Schwab (SCHW), and Interactive Brokers (IBKR).
How did the profits at each company look compared to the same quarter in 2012? E*TRADE lost 65 cents per share this quarter, compared to a loss of just two cents per share last year. TD Ameritrade matched last year’s results with a number of 27 cents per share. Interactive Brokers reported a profit of 19 cents per share this year, which was a dime lower than its profit in the same quarter a year ago. Charles Schwab reported a profit of 15 cents per share, two cents better than it’s earnings in the same quarter last year.
E*TRADE 2012 4th Quarter Earnings Fast Facts:
The loss was 11 cents worse than analysts were expecting from E*TRADE.
DARTs (Daily Average Revenue Trades) were down nine percent from the same quarter a year ago.
This quarterly result included a one-time fee of 59 cents per share to refinance $1.3 billion in debt.
E*TRADE is tackling its balance sheet risk. Going after this risk hits the earnings in the short-term, but it should make the company healthier in the long run.
The one-time fees really made this quarter look worse than it truly was. E*TRADE executives noted on the earnings call that they saw a record low attrition rate of just nine percent in 2012. Customers are sticking with E*TRADE at a much higher rate than they were in the past, which E*TRADE believes is due to improvements in customer service. E*TRADE brought in $10.4 billion in net new assets during 2012. E*TRADE reported a net loss of 39 cents for the full year in 2012.
Interactive Brokers 2012 4th Quarter Earnings Fast Facts:
Net income decreased 32.8 percent from a year ago.
Revenue came in at only $247.1 million for the quarter, which was far short of analysts estimates of $273 million.
The market making division saw its pre-tax income drop an alarming 91 percent.
The electronic broker segment actually saw pre-tax income that was two percent higher than a year ago.
Interactive Brokers has really been hurt by the lack of volatility in the markets over the last few quarters. This is a company that thrives when the market is moving quickly, but lately there has been a remarkable calm surrounding the stock market. For the full year 2012, cleared DARTs decreased six percent. On a non-comprehensive basis, Interactive Brokers reported $0.89 per share for the full year 2012 compared to a profit of $1.37 per share in 2011.
TD Ameritrade 2012 4th Quarter Earnings Fast Facts
Record Net New Client Assets of $16 billion in the quarter, which was more than 52.9 percent higher than last year.
TD Ameritrade beat analysts estimates by three cents per share. They also reported revenue which was $15 million higher than analysts had expected.
DARTs were 334,000 in the fourth quarter. This disappointing number really cut into TD Ameritrade’s earnings potential.
Interest rate sensitive assets great to $90 billion in the quarter. The company is positioning itself well for rising interests in the future.
TD Ameritrade paid a special divided of 50 cents per share in the quarter. The company also announced a nine cent per share quarterly dividend which will be payable on February 15. Though DARTs were very disappointing in the fourth quarter, TD Ameritrade said in its earnings call that January DARTs are running at the highest level since last May. Total client assets are now approximately $481 billion.
Charles Schwab 2012 4th Quarter Earnings Fast Facts:
Both earnings per share and revenue came in exactly in-line with analysts estimates.
Core net new assets in the quarter were $22.6 billion, which is 28 percent higher than the previous record.
DARTs were 450,000 in the quarter. This is down two percent from last year, but up 12 percent from the third quarter.
Schwab now has 865,000 banking accounts, which is 11 percent higher than a year ago.
Charles Schwab continues to show some relative strength based on its more diversified revenue streams. Schwab reported 69 cents per share for the full year 2012, versus a profit of 70 cents per share in 2011. Schwab’s revenue was up to $4.88 billion this year compared to $4.69 billion a year ago. Total accounts reached a level of 6.1 million as of the year end, which is seven percent higher than last year.
The entire year of 2012 was a difficult one for online brokers. The fourth quarter was really just an extension of the rest of the year. Interactive Brokers and E*TRADE both missed analysts estimates pretty badly in the quarter. Schwab came in right at analysts estimates. TD Ameritrade was able to deliver a fairly sizable beat, but you could argue that expectations were rather low going into their report. The decline of DARTs really hurt the entire group in 2012. Early estimates look like 2013 is starting slightly better in that regard, so it will be interesting to see how the first quarter turns out. StockBrokers.com will revisit earnings from this sector again in a few short months.