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E*TRADE’s 4Q17 Earnings and Revenues Beat Estimates

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Beats EPS estimates

E*TRADE Financial Corporation (ETFC) reported 4Q17 earnings per share (or EPS) of $0.64, exceeding analyst estimates by $0.03. E*TRADE reported additional tax costs of $58.0 million in 4Q17 due to the recently passed Tax Cuts and Jobs Act.

E*TRADE’s management reflected positive views with respect to its 4Q17 results. With the help of its retail investors and its derivatives platform, the company saw favorable momentum in its net new brokerage assets, daily average revenue trades (or DARTs), margin balances, and derivatives business.

On December 31, 2017, E*TRADE’s customer margin balances stood at $9.1 billion. The chart below compares the beta values of ETFC with its competitors.

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Revenue estimates

E*TRADE reported 4Q17 revenues of $637.0 million, exceeding analysts’ estimates by ~$7.9 million. Among its peers (XLF), Charles Schwab (SCHW) and Interactive Brokers Group (IBKR) reported 4Q17 revenues of ~$2.2 billion and $515.0 million, respectively. However, TD Ameritrade (AMTD) posted fiscal 1Q18 revenues of ~$1.3 billion.

E*TRADE’s net income in 4Q17 stood at $129.0 million, which was an increase over its 4Q16 net income of $127.0 million. In 4Q17, the company’s net new brokerage assets stood at $3.2 billion.

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