Zacks_Analysts' Blog : Interactive's Sept. Metrics Down - Analyst Blog

Earlier this week, Interactive Brokers Group Inc.’s (IBKR) Electronic Brokerage segment announced monthly brokerage data for September. The segment under review clears and settles trades globally for both individual and institutional clients.

Interactive’s total customer Daily Average Revenue Trades (DARTs) fell 7% from the prior month but surged 45% from the prior-year month to 510,000. However, total customer accounts for the month of September were 183,900, up 1% from 181,500 in August 2011 and 22% from 150,600 in September 2010.

Furthermore, during the reported month, Interactive recorded Cleared Customer DARTs of 474,000 compared with 507,000 in August 2011 and 319,000 in September 2010. On an annualized basis, the company reported Cleared Average DART per customer account of 654,000, up from 712,000 in the previous month and 537,000 in the comparable month last year.

Interactive’s total options contracts declined 24% from the prior month but rose 44% from the year-ago month to 26,459 in September 2011. Also, during the month under review, the company’s futures contracts stood at 8,878, down from 10,975 in the prior month but up from 6,507 in the year-ago period.

Interactive also provided period-end statistics for customer equity, customer credit balances, and customer margin loan balances. For the period ended September 2011, customer equity stood at $23.3 billion, down 8% sequentially but up 23% year over year.

Additionally, Interactive’s Electronic Brokerage segment recorded customer credit balances of $16.5 billion at September 2011 end, down marginally from $16.7 billion at August 2011 end, but up 25% from $13.2 billion at September 2010 end. Similarly, customer margin loan balances of $6.8 billion in the reported month reflected an 8% drop from $7.4 billion recorded at August 2011 end but a 26% hike from $5.4 billion registered at September 2010 end.

Though Interactive’s fundamentals remain strong with a liquid balance sheet, sturdy capital base and high barriers to entry, we remain concerned about the Market Making segment’s ability to consistently generate sufficient returns to fund dividend payment. Also, there are concerns looming over Interactive’s dependence on IBG LLC and its wide international exposure.

Interactive currently retains a Zacks #1 Rank (a short-term ‘Strong Buy’ rating). However, one of its competitors, Knight Capital Group Inc. (KCG) retains a Zacks # 3 Rank (a short-term ‘Hold’ rating).