Back to Main

E*TRADE Reaches New 52-Week High - Analyst Blog

By: Zacks.com
Posted: 9/9/2013 10:57:00 AM
Referenced Stocks: AMTD;ETFC;GCAP;ITG

Shares of E*TRADE Financial Corporation ( ETFC ) touched a new 52-week high of $16.47 during its trading session on Sep 6, reflecting an increase over the previous high of $15.97 reached on Sep 4.  

E*TRADE Financial closed the trading on Sep 6 at $16.26, reflecting a solid year-to-date return of 83.7%. The trading volume for the session was 7.5 million shares. Further upside potential exists for this Zacks Rank #2 (Buy) online brokerage firm as evident from the earnings estimate revisions in the last 60 days and expected earnings growth of 283.8% for 2013.

Growth Drivers

E*TRADE Financial's monthly activity update for the month of Jul 2013 shows that Daily Average Revenue Trades (DARTs), representing the number of trades from which brokers can expect commissions or fees, rose 10% on a year-over-year basis. This, however, reflected a sequential decline of 2%.

Total number of accounts at the end of the month came to about 4.6 million, comprising 3.0 million brokerage accounts, 1.2 million stock plan accounts and 0.4 million banking accounts. Gross new brokerage accounts in the month were 25,030, while E*TRADE's net new brokerage assets were $0.6 million.

Prior to this monthly activity update, on Jul 22, 2013, E*TRADE reported its financial results for the second quarter of 2013. Net income per share came in at 21 cents, up 75% over the year-ago quarter and 61.5% above the Zacks Consensus Estimate of 13 cents.  

Moreover, excluding the goodwill impairment and other non-recurring items, core operating expenses declined 7.4% sequentially to $262 million. Additionally, the company maintains a robust capital position in compliance with the regulatory guidelines.

In addition to the above, the recent approval of E*TRADE's subsidiary, E*TRADE Bank to distribute dividend capital amounting to $100 million to the parent company has led to a positive revision in the earnings estimate. Expectations regarding E*TRADE's performance in the quarters ahead remain high. We currently have an Earnings ESP (Read: Zacks Earnings ESP: A Better Method ) of +6.4% for 2013 and +9.5% for 2014.

Estimate Revisions Show Potency

Over the last 60 days, the Zacks Consensus Estimate for E*TRADE Financial increased by 26.0% to 63 cents per share for 2013 and rose 21.3% to 74 cents for 2014.

Other stocks to watch out for in the industry are GAIN Capital Holdings, Inc. ( GCAP ) and TD Ameritrade Holding Corporation ( AMTD ), each holding a Zacks Rank #1 (Strong Buy) while Investment Technology Group Inc. ( ITG ) carries a Zacks Rank #2 (Buy).



TD AMERITRADE (AMTD): Free Stock Analysis Report

E TRADE FINL CP (ETFC): Free Stock Analysis Report

GAIN CAP HLDGS (GCAP): Free Stock Analysis Report

INVEST TECH-NEW (ITG): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research