E-Trade Financial Corporation (NASDAQ: ETFC): Q2 Earnings Preview 2011

E-Trade Financial Corporation (NASDAQ: ETFC) is scheduled to release its second-quarter earnings after the closing bell on Wednesday, July 20, 2011. Analysts, on average, expect the company to report earnings of 16 cents per share on revenue of $516.20 million. In the year ago period, the company reported earnings of 12 cents per share on revenue of $368.30 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 first 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. Total net revenues for the quarter remained flat with the same quarter last year at $536.70 million. Analysts, on average, expected the company to report earnings of 11 cents per share on revenue of $388.54 million.

E*Trade, a darling of the late 1990s tech boom, plunged into a multi-year string of losses when the bottom fell out of the U.S. mortgage market in 2007. The online retail broker’s shares have tumbled more than 90 percent since the start of 2007 as the company posted more than $3 billion of losses related to bad mortgages following the subprime crisis. The company has seen trading volume fall in recent months as turbulent markets leave investors skittish. E*Trade said last month that its daily average revenue trades for the month of May were 153,943, a 4% decrease from April and a 22% decline from the year-earlier period, which included the stock market's "flash crash." E*Trade added 28,895 brokerage accounts in May--a 32% drop from the prior month--to bring its total number of brokerage accounts to 2.8 million. In the same period last year, the company added 49,945 new brokerage accounts.

Recently, E*Trade Financial Corp's largest shareholder Citadel LLC urged the discount brokerage to put itself up for sale and take other steps to boost shareholder value. Citadel plans to submit a notice calling on shareholders to support a special meeting if E*Trade doesn’t do so on its own by July 22, according to the letter.Citadel owns about 9.8 percent of the New York-based company. E*Trade would be required to hold a special meeting once holders of 10 percent of its stock request it. At the special meeting, shareholders should vote on removing the staggered board provisions, removing directors Michael Parks and Donna Weaver and hiring an investment banking firm to review “strategic alternatives,” including a possible sale of the company.Citadel led a $2.5 billion cash infusion into the company in 2007, and engineered a 2009 share sale and debt swap designed to shore up capital and eliminate $1.7 billion of E*Trade debt. E*Trade obtained this help after suffering big losses from a disastrous foray into mortgages.

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.

Full Disclosure: None.

E-Trade Financial Corporation (NASDAQ: ETFC): Q1 Earnings Preview 2011

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.  

Full Disclosure: None.

E-Trade Financial Corp. (NASDAQ:ETFC): Q4 Earnings Preview 2010

E-Trade Financial Corporation (NASDAQ: ETFC) is scheduled to release its fourth-quarter earnings after the closing bell on Wednesday, January 26, 2011. Analysts, on average, expect the company to report earnings of 4 cents per share on revenue of $322.94 million. In the year ago period, the company posted a loss of 40 cents per share on revenue of $231.04 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 third quarter, the New York-based company's net profit was $8 million, or 3 cents a share, compared to a loss of $855 million, or $6.74 a share, in the same quarter last year. Revenue dropped to $489 million from $575 million. Analysts, on average, expected the company to report earnings of 3 cents per share on revenue of $317.43 million. Loan loss provisions and charge-offs dropped for another quarter, suggesting the company is recovering from mortgage market losses that have dragged down its trading operation.

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. Brokerages have been working to motivate investors to return to trading, competing against itself for larger shares of the dwindling trading volumes by moving strongly toward lower commission schedules and commission free ETFs.

The company has seen a solid rebound in the size of its client base. E-Trade ended the month of November with around 2.7 million brokerage accounts, including gross new brokerage accounts of 30,355 and net new brokerage accounts of 5,182 during the month. Total accounts ended the month at around 4.2 million. In November, E-Trade's daily average revenue trades, or DARTs, totaled 158,770, a sequential increase of 9% and a year-over-year increase of 4%. Retail trading volumes have seen a pick up at E*Trade and its rivals TD Ameritrade (NASDAQ: AMTD) and Charles Schwab (NASDAQ: SCHW) in the last few months, however volumes have still been below last year, given the volatile markets.

Among other developments, E-Trade Financial recently confirmed that its three-year contract with Citadel Investment Group -- where the giant investment firm would provide order flow for a large chunk of E*Trade's retail trades -- expired as of December 31. E*Trade has been increasingly expanding its own market making business under E*Trade Capital Markets.

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 still has few issues.

In terms of stock performance, E-Trade shares have lost nearly 11 percent over the past year.  

Full Disclosure: None.

E-Trade Financial Corp. (NASDAQ:ETFC): Q1 Earnings Preview 2010

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.

E-Trade Financial Corporation (NASDAQ:ETFC): Q4 Earnings Preview 2009

E-Trade Financial Corporation (NASDAQ:ETFC) is scheduled to release its fourth-quarter financial results after the market close on Wednesday, January 27, 2009. Analysts, on average, currently expect the company to report a net loss of 4 cents a share on revenue of $240.52 million. In the year ago quarter, the company reported a net loss of 50 cents per share on negative revenue of $26.40 million.

E*Trade is a leading online brokerage firm, which also offers retail banking services, such as checking and savings accounts and CD accounts.

E-Trade has been hit hard during the recession and credit crisis as its mortgage business suffered a major blow due to a severe slump in housing sector. The New York-based company has lost $3.49 billion since the third quarter of 2007 from loan defaults and was forced to accept capital injections Citadel Investment Group last year. In October, the company reported a third quarter loss that widened from a year ago, on charge-offs and higher loan loss provision, however, beat analysts' estimate by a penny. The New York-based company reported a net loss for the third quarter of $832 million or $0.66 per share, compared to a loss of $50 million or $0.09 per share in the year-ago quarter. Excluding the impact of the item, the company reported a net loss of $59 million, or $0.05 per share for the third quarter of 2009. Total net revenues for the quarter decreased to $347.22 million from $517.80 million in the prior-year quarter. Analysts, on average, expected the company to report earnings of $0.06 per share on revenue of $202.49 million.

At the end of third quarter, the company had Bank Tier 1 capital ratios of 6.72% to total adjusted assets and 13.15% to risk-weighted assets. The Bank had excess risk-based capital, which is above the level regulators define as well-capitalized, of $985.4 million as of September 30, 2009. At quarter end, E*TRADE reported 4.5 million customer accounts, which included a record 2.7 million brokerage accounts. The average commission per trade increased by $0.45 during the quarter to $11.50.

There now seems to be a consensus that the company has turned the corner. However, return to profitability still remains a big challenge. Last month, E*TRADE said that total special mention delinquencies, 30 days to 89 days delinquencies, declined 3% from September 30 to November 30, while total "at risk" delinquencies, 30 days to 179 days delinquency, declined 2% for the same period. For its home equity portfolio, which represents the company's greatest exposure to loan losses, special mention delinquencies declined by 8% from September 30 to November 30, while total "at risk" delinquencies dipped 5% for the same period. However, the company reported that its total daily average revenue trades for November declined 22% from the same period in 2008 and 13% decline sequentially from October. Still, year-to-date, through November, DARTs are up 6% from the same period last year. E-Trade registered a 22% decline in daily average revenue trades for the month of October compared to the previous year. Total customer assets at the end of October were $142.90 billion, up 19.7% from 119.38 billion last year. Total accounts at the end of October rose 2.2% to 4.50 million from 4.41 million last year. Total gross new accounts, however, decreased 60.1% to 52,407 from the previous year. E*Trade lost 2,569 net accounts in October, compared to a net account growth of 57,191 last year.

In December, ETFC announced that it is restructuring its international business. It also agreed to sell its local market trading operations in Germany and the Nordic region.

The company has been the subject of takeover speculation for most of 2009. According to industry experts, E-Trade is a potential acquisition target for bigger rivals like TD Ameritrade (NASDAQ: AMTD) and Charles Schwab (NASDAQ: SCHW). Shares of the company surged early this month after the Daily Telegraph said the company is in advanced talks about a sale.

In terms of stock performance, E-Trade shares are up 49% over the past year.

Full Disclosure: None.

E-Trade Financial Corp. (NASDAQ:ETFC): Third Quarter Earnings Preview 2009

E-Trade Financial Corporation (NASDAQ:ETFC) will release its third-quarter financial results after the market close on Tuesday, October 27, 2009. Analysts, on average, currently expect the company to report a net loss of 9 cents a share on revenue of $202.49 million. In the year ago quarter, the company reported s net loss of 9 cents per share on revenue of $377.73 million.

E*Trade is a leading online brokerage firm, which also offers retail banking services, such as checking and savings accounts and CD accounts.

E-Trade has been hit hard during the recession and credit crisis as its mortgage business suffered a major blow due to a severe slump in housing sector. In July, the company reported that its second quarter loss widened to $143.24 million or $0.22 per share from $94.56 million or $0.19 per share, in year-ago quarter. Loss from continuing operations for the quarter was $143.24 million or $0.22 per share, compared to $119.44 million or $0.24 per share in the year-earlier quarter. Analysts, on average, expected a loss of $0.31 per share for the quarter. Quarterly results included a provision for loan losses totaling $404.53 million for the quarter, up fro $319.12 million kept apart in the corresponding quarter last year. The Bank had excess risk-based capital, which is above the level regulators define as well-capitalized, of $916 million as of June 30, 2009. Net operating interest income was $339.59 million, compared to $342.76 million in the comparable quarter last year. Total non-interest income increased to $281.32 million from $189.57 million in the prior-year quarter.

Total net charge-offs surged to $386.39 million in the second from $53 million in the prior quarter. At quarter end, E*TRADE reported a record 4.5 million customer accounts, which included a record 2.7 million brokerage accounts.

However, the worst seems to be over for the company and there are improving trends in the firm's business. Last month, company reported strong client trading during August, prompting many analyst upgrades. The New-York based online brokerage firm reported a 37.4% increase in total daily average revenue trades for the month of August. At the end of August, the company recorded brokerage accounts of more than 2.73 million, including gross new brokerage accounts of 31.32 thousand and net new brokerage accounts of 11.32 thousand during the month. The company noted that, at the end of the month, total brokerage accounts were more than 4.52 million.

Customer security holdings for the month declined 17.2% to $107.31 billion from $129.67 billion last year. Brokerage related cash for the month increased by $982 million compared with last year. However, this was offset by a $380 million reduction in bank related customer cash and deposits, as the company continued to execute on its balance sheet reduction strategy. Total customer assets for the month declined 13% to $142.32 billion from the comparable period.

Also in September, the company provided an update concerning delinquencies in its loan portfolio. Special mention delinquencies, which are 30 to 89 days delinquent, for its home equity portfolio, remained flat from June 30 to August 31. Home equity delinquencies, that are 30 to 179 days delinquent, declined 7% from June 30 to August 31. Total special mention delinquencies for the company's loan portfolio, which includes one- to four-family, home equity and consumer and other loans, declined by 4% quarter to date, as of August 31, 2009, , suggesting stabilization in its home-equity-loan business. Further, the company reported quarter-to-date total net revenues of $413 million. Commission, fees and other revenues for the period was $151 million. Operating expense for the period totaled to $188 million.

For the third quarter, the company expects provision for loan losses of $300 million to $375 million and net charge-offs of $350 million to $375 million.

Recent capital actions have also allayed concerns about the financial health of the company. In late August, the company completed a $1.74 billion debt exchange to bolster its capital position as investments related to real estate soured. Last month, Office of Thrift Supervision asked the company to pump another $100 million into its bank to bolster the unit's capital. Subsequently, E-Trade unveiled plans to raise $150 million selling new common stock.

Citadel Investment Group, which twice injected capital into the struggling online brokerage, has both converted part of its huge debt holdings in E*Trade Financial Corp. into stock and cut its stake in the firm to avoid crossing a key regulatory boundary.

According to few industry experts, E-Trade is also a potential acquisition target for bigger rivals like TD Ameritrade (NASDAQ: AMTD) and Charles Schwab (NASDAQ: SCHW).

In terms of stock performance, E-Trade shares are up 20% since the beginning of the year. Shares of the company gained 3 cents or 1.23% to $1.64.

Disclosure: Author doesn’t own any of the stocks discussed here.