It's time for another episode of Extreme Home Makeover: Discount Broker Edition. E*Trade
An emphasis on conventional banking services once set E*Trade apart from its rivals like TD AMERITRADE
In E*Trade's case, it's an albatross that reared its head late in the subprime meltdown. After all, there's nothing shabby about the company's second-quarter report. Revenues climbed 9% higher as earnings before a one-time hit in its institutional equity business rose by 17%.
E*Trade also spoke out last month, revealing that the quality of its loan portfolio is pretty good. Investors weren't convinced, though. Despite holding up well on the stock brokerage front, the market's appetite for E*Trade's shares hasn't been the same as that for its competitors.
9/17/07 |
YTD Gain |
|
---|---|---|
E*Trade |
$14.21 |
(36.7%) |
TD AMERITRADE |
$17.78 |
9.9% |
Charles Schwab |
$20.04 |
3.6% |
Just three months ago, E*Trade's guidance called for 2007 profits per share to come in between $1.58 and $1.72. Depressed share prices wooed value investors, figuring they were landing a bargain.
Well, they're getting less than they bargained for now. Loan losses, the potential of securities impairments, and a refined focus on retail growth find the company hosing down its guidance. E*Trade now expects to earn between $1.05 and $1.15 per share this year.
It's funny how a few months can change one's perspective. A year ago, E*Trade seemed like the teacher's pet among discount brokers with its diversified financial services portfolio. Big banks like Bank of America
The house always wins at the casino, but not on Wall Street.