E-Trade Financial is scheduled to release its Q12010 earnings after the closing bell on Wednesday, April 21, 2010. Analysts, on average, expect the company to report a loss of $0.03 per share in the first quarter with estimates ranging from a loss of $0.05 to breakeven per share. Revenues for the quarter are estimated to be $243.48 million. In Q12009, the company reported a loss of $0.41 per share on revenue of $43.38 million.E*Trade is a leading online brokerage firm, which also offers retail banking services, such as checking and savings accounts and CD accounts.
In the preceding Q42009, the New York-based company posted a net loss of $67 million or $0.04 per share for the fourth quarter, compared to a net loss of $276 million or $0.50 per share in the prior year quarter. Revenue grew to $523.44 million from $486.43 million in the same quarter last year. Analysts, on average, expected the company to report a loss of $0.04 per share on revenue of $240.52 million. At the end of fourth quarter, E*Trade reported 4.5 million customer accounts, which included 2.7 million brokerage accounts. E-Trade's loan portfolio shrank by $1.1 billion during the fourth quarter of 2009. Net charge-offs totaled $324 million in the period, down by $27 million from the previous quarter.
The Company ended the month of February with more than 2.6 million U.S. brokerage accounts, including gross new brokerage accounts of 29,897 and net new brokerage accounts of 7,761 during the month. Total accounts ended the month at about 4.4 million. Daily Average Revenue Trades or "DARTs" from U.S. operations for February were 138,728, a 20% decline from January and 15% from the year ago period. During the month, customer security holdings grew 5% or $5.5 billion, and brokerage-related cash rose by $0.3 billion to $20 billion.
E-Trade is one of the largest discount brokers in the U.S., competing with Charles Schwab and TD Ameritrade. However, E-Trade built a banking business too and this part of the company has suffered as the housing crisis left it with big mortgage-related losses. E-Trade is now trying to shrink its banking business to focus on its main brokerage unit. Despite few positive signs, return to profitability still remains a big challenge for the company.
Last month, the online brokerage firm announced that it has appointed Steven Freiberg as the new chief executive officer, effective April 1, 2010. Freiberg will succeed interim Chief Executive Officer Robert Druskin.
The company's board has also approved a 1-for-10 reverse stock split. The split “should help boost the firm’s perception’’ by pushing the shares above $5 each which in turn will attract institutional investors.
E-Trade has been a rumored takeover target for the past 2 years despite denials from other brokerage firms. While the company’s brokerage accounts would be attractive to another broker/dealer; E-Trade’s balance sheet has a few issues. E*TRADE has twice as much debt as cash and a negative ROE.
In terms of stock performance, E-Trade shares have lost nearly 5 percent since the beginning of the year.
Full Disclosure: None.
