E-Trade Financial Corporation (NASDAQ: ETFC) is scheduled to release its first-quarter earnings after the closing bell on Wednesday, April 20, 2011. Analysts, on average, expect the company to report earnings of 11 cents per share on revenue of $388.54 million. In the year ago period, the company posted a loss of 25 cents per share on revenue of $268.54 million.
E-TRADE Financial Corporation, through its subsidiaries, provides online brokerage and related products and services primarily to individual retail investors under the E*TRADE Financial brand name worldwide.
In the preceding fourth quarter, the New York-based company’s net loss was $24.12 million or 11 cents per share, compared to a loss of $67.15 million or 36 cents per share, in the same quarter last year. Revenue dropped to $517.95 million from $523.44 million in the same quarter last year. Analysts, on average, expected the company to report earnings of 4 cents per share on revenue of $321.77 million. Provision for loan losses for the quarter dropped to $193.78 million from $292.40 million in same quarter last year.
The competitive position in the market for brokerage business depends on trading customers, predominantly active traders. As the long-term investing customer group is less developed compared with the trading customers, there is an opportunity for future growth as and when the long-term customers expand. Development of innovative online trading and long-term investing products and services, delivery of advanced customer service, creative and cost-effective marketing and sales, and expense discipline can be considered as key factors in executing E-TRADE’s strategy to profitably grow trading and investing business.Additionally, somewhat stabilization in the credit quality reflects that management can now focus more on the company’s core business.
The company has seen a solid rebound in the size of its client base. Last month, the company said that its total gross new brokerage accounts for February rose 24.1 percent from the same period last year to 37,109. The company ended the month with about 2.72 million brokerage accounts, including net new brokerage accounts of 18,343 during the month. This represents a 3 percent increase from 2.64 million brokerage accounts at the end of the prior-year period. Net new brokerage assets were positive $1.4 billion in the month, which according to the company was the highest level since October 2008. This compares to net new brokerage accounts of $0.6 billion in the same period last year. Net new customer assets for the month were $1.5 billion, up from $0.3 billion at the end of the prior-year period. Total customer cash and deposits for August increased 7.1 percent from the prior year to $34.8 billion. E*Trade ended the month with total customer assets of $189.3 billion, up 25.7 percent from a year ago. The company's daily average revenue trades or DARTs for February were 185,717, up 33.9 percent from 138,728 in the previous year. DARTs increased 2.6 percent from 180,967 in the previous month.
The worst seems to be over for the company and there are improving trends in the firm's business. For the company's entire loan portfolio, total special-mention delinquencies that are 30 to 89 days delinquent decreased 7 percent in February from the end of December 2010 and decreased 2 percent from the end of January 2011. Total "at risk" delinquencies at the end of the month that are 30 to 179 days delinquent decreased by 5 percent from end-December and declined 1 percent from the end of January.
Development of innovative online trading and long-term investing products and services, delivery of advanced customer service, creative and cost-effective marketing and sales, and expense discipline can be considered as key factors in executing E*TRADE’s strategy to profitably grow trading and investing business.
During the quarter in review, Citadel LLC, its largest shareholder and bondholder, sold nearly 24 million of the hedge fund's shares in the online brokerage, or the majority of its equity stake in the company. To help E*Trade cope with heavy losses from its bank's mortgage portfolio, Citadel provided the online brokerage with a $2.5 billion cash infusion in late 2007 and injected the majority of $1.7 billion in a debt exchange in late 2009.
The company's stock currently trades at a forward P/E (fye Dec 31, 2012) of 15.55 and PEG ratio (5 yr expected) of 0.70. In terms of stock performance, E-Trade shares have lost nearly 8 percent over the past year.
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