It's all about expectations. Despite posting some pretty solid numbers across the board, optionsXpress
A soft retail trading environment has pressured shares of optionsXpress, E*Trade
Some of the trends proved disappointing. Daily average revenue trades only increased 4% versus the year-ago period, customer trades per account dropped 19%, average commission per trade increased 2%, and advertising expense per net new customer account increased 214%.
Although the results were pretty soft, I would hesitate to extrapolate one quarter's results. During the quarter, the market suffered a pretty big scare, what with the fallout from the subprime issue and housing concerns. I have no idea what direction the stock market will go in and what implications that will have on future trading volumes, but if one thinks the market isn't due for a big drop-off, then optionsXpress' shares, at a projected 15 times forward earnings, are worth a look. (Keep in mind, this company has 64% pretax margins, and I calculate its run-rate return on equity in excess of 40%.)
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Fool contributor Emil Lee is an analyst and a disciple of value investing. He doesn't own shares in any of the companies mentioned above. Emil appreciates your comments, concerns, and complaints. The Motley Fool has a disclosure policy.