E*Trade's Growth Slows On Fewer Transactions and New Accounts

Discount online broker E*Trade Financial Corp.'s second-quarter net income rose just 1.6%, but shares rose 2.6% in after-hours trading Wednesday. Fewer transactions and new accounts were to blame for the company's slow growth. EPS came in at $0.37 on a GAAP basis versus last year's total of $0.36. On a non-GAAP basis, EPS was $0.42 due to a $0.05/share charge for legal and regulatory fees. The company again revised its full-year forecast (it had already trimmed its outlook during its Q1 report) to $1.58-1.72 a share (the midpoint was unchanged at $1.65). Revenue jumped 8.5% to $664 million on strength from institutional investors. Analysts were expecting EPS of $0.40 on revenue of $664 million. Net income after provisions for loan losses climbed 15%. The number of new retail accounts opened during the recent quarter fell 15% to 100,676, while total client assets were up 6.1% y/y to $213 billion. Mitchell Caplan: "Our second quarter performance speaks to the progress we have made as a company in executing against our strategic plan." (See full conference call transcript.)

Sources: Press Release, Wall Street Journal, TheStreet.com, Reuters, MarketWatch, Dow Jones Newswires
Commentary: E*Trade Total Client Asset Gain Trails S&P500 In April • Suitors For TheStreet.com: Financial Media and Online Brokers? • Cramer's Take on ETFC
Stocks/ETFs to watch: ETFC. Competitors: AMTD, SCHW. ETFs: FDN, HHH
Earnings call transcripts: E*TRADE Financial Q2 2007 Earnings Call Transcript

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