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Can Macros and Mixed Sentiment Drive E*TRADE’s Q2 2018 Earnings?

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Year-over-year growth

E*TRADE Financial Corporation (ETFC) is scheduled to release its second-quarter results on July 19. Wall Street is expecting EPS of $0.89, implying year-over-year growth of 27.1%. This growth is expected to come largely from higher net interest income as well as higher commissions. However, sequentially, the company’s commissions are expected to decline on the back of lower market movements resulting in lower trading activity among the company’s clients.

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E*TRADE’s second-quarter commissions are expected to grow year-over-year, primarily because of the expected rise in the daily average revenue trades or DARTs. In April, the company’s DARTs stood at 249,939, implying a year-over-year rise of 28%. In May, the DARTs stood at 253,649, which implies a 20% rise.

E*TRADE’s fees and commissions, net interest income

E*TRADE ended May with total brokerage accounts of 3.9 million, which implies a rise of 9% year-over-year. In the second quarter, E*TRADE Financial is expected to post fees and commissions income of $113.32 million as well as net interest income of $466.45 million.

Expected revenues

E*TRADE Financial is expected to garner revenues of $705.9 million in the second quarter, which implies a year-over-year rise of 22.40%. In the June quarter, other players (VFH) in the direct brokerage industry The Charles Schwab Corporation (SCHW), TD Ameritrade Holding Corporation (AMTD), and Interactive Brokers Group (IBKR) are expected to post revenues of $2.47 billion, $1.35 billion, and $428.42 million, respectively.

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