Banking, finance, and taxes

E*Trade Rises on Strong Earnings Beat

Chris Lange

Published: October 21, 2016 11:05 am

Last Updated: January 13, 2020 2:05 am

When E*Trade Financial Corp. (NASDAQ: ETFC) reported its third-quarter financial results after the markets closed on Thursday, it posted $0.51 in earnings per share (EPS) and $486 million in revenue. The same period of last year reportedly had EPS of $0.33 and $443 million in revenue, while Thomson Reuters consensus estimates for the recent period called for $0.40 in EPS and revenue of $486 million.

During this quarter, E*Trade acquired OptionsHouse for $725 million, funded through the issuance of $400 million of non-cumulative perpetual preferred stock and $325 million of corporate cash.

Net new brokerage accounts totaled 162,000, including 148,000 from the OptionsHouse acquisition, and an annualized attrition rate of 8.0%.

Daily average revenue trades (DARTs) were 152,000 in the quarter, including 6,500 DARTs from the OptionsHouse acquisition.

Net new brokerage assets totaled $5.4 billion, including $3.7 billion from the OptionsHouse acquisition, ultimately ending the period with total customer assets of $307 billion.

Karl Roessner, CEO of E*Trade, commented:

This quarter was transformative for E*TRADE as we completed our first acquisition in over a decade, restructured our executive team and refocused the entire organization on growth, which is our unambiguous charge. We have a handful of clear-cut objectives around which we have aligned: First, to swiftly and flawlessly integrate OptionsHouse, with a commitment to fully realize the value of the acquisition; second, to reclaim our position as a trading powerhouse while at the same time emphasizing our investing offerings; and third, to improve our marketing to more effectively engage with customers and prospects. While we have serious work to do on a very aggressive timeline, I am confident in our ability to get the job done. Separately we are maniacally focused on driving operating leverage through increased efficiency and have taken meaningful steps, reducing $21 million of annual expense, over and above all expense synergies related to the OptionsHouse acquisition. On a personal front, I am thrilled to be leading this company, which I have supported and cared so deeply about for over 15 years. E*TRADE is a fantastic franchise with tremendous opportunity and I believe we are in a strong position to continue to deliver value for our shareholders and our customers.

Shares were last seen up about 6% at $29.91 on Friday, with a consensus analyst price target of $31.93 and a 52-week trading range of $19.61 to $30.98.