On Apr 2, 2013, we reiterated our long-term recommendation on
E*TRADE Financial Corporation
) at Neutral. Our decision primarily rests on lower operating
expenses. Yet, a decline in the top line along with reduced new
brokerage accounts acted as the headwinds.
TD AMERITRADE (AMTD): Free Stock Analysis
E TRADE FINL CP (ETFC): Free Stock Analysis
KNIGHT CAP GP (KCG): Free Stock Analysis
STIFEL FINL (SF): Free Stock Analysis Report
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In fourth quarter 2012, E*TRADE reported a net loss of 65 cents
per share, which exceeded the Zacks Consensus Estimate of a loss
of 54 cents. Earnings were adversely affected by a decline in top
line and a fall in total daily average revenue trades (DARTs).
Following its fourth-quarter results, the Zacks Consensus
Estimate for 2013 went up by 1.8% to 57 cents per share over the
last 60 days. The Zacks Consensus Estimate for 2014 also inched
up 1.4% to 70 cents per share over the same time frame. Hence,
E*TRADE currently holds a Zacks Rank #2 (Buy).
In spite of the volatile equity markets, E*TRADE's focus on loss
mitigation strategies and its continuous efforts on increasing
accounts and assets is expected to enhance DARTs in the near
future. Also, cost reduction initiatives taken by E*TRADE is
expected to prove beneficial for the company going forward.
Moreover, E*TRADE continues to streamline its balance sheet by
lowering credit risks in its loan portfolios.
On the other hand, though E*TRADE is taking initiatives to
strengthen its client-advisor relationship, it could experience a
pressure on DARTs as a result of the disengagement of retail
traders. Moreover, a sluggish economic recovery, strict
regulatory environment coupled with investors' cautious attitude
towards equity market investments can pressurize the DARTs
Other Brokerage Firms to Consider
Besides E*TRADE, other major brokerage firms that are performing
well and can be considered for investment include
Knight Capital Group, Inc
TD Ameritrade Holding Corporation
Stifel Financial Corp
). All these carry a Zacks Rank #2.