On the heels of healthy reports earlier this week out of Ameritrade
Net revenue per share soared 35% higher. Revenue per share? That's right, I'm not going to toss around the 58% net revenue growth figure that everyone else seems to be rolling with. E*Trade's growth hasn't all been organic after its $700 million acquisition of Harrisdirect and the $1.6 billion deal for BrownCo., so I prefer to divide net revenue by the number of fully diluted shares outstanding to provide a more accurate snapshot.
Naturally, 35% growth is nothing to scoff at either. E*Trade has done well, just as it did three months ago when it announced healthy March quarter results.
Back then, the company raised its 2006 outlook by a nickel a share, and it's ratcheting its guidance higher again this time around. The company is looking to earn between $1.42 per share and $1.52 per share this year. That's ahead of April's forecast calling for profits per share between $1.35 and $1.50. E*Trade has earned $0.69 a share through the first six months of the year, so it's looking for slight sequential improvement in the second half of 2006.
These are good times for the discount brokerage industry. E*Trade is working off fat net interest spreads and posting record operating profit margins. The broker's success is hogtied to investor trading patterns, and one has to be encouraged. If investors are coming out to play in this kind of meandering market, just think how good E*Trade and its rivals will look when the market's in an aggressive buying mood again.
Well played, E*Trade. This is the fifth consecutive quarter in which the broker has clocked in ahead of Wall Street's profit targets, and the scary thing is that it just may be warming up for something better down the road.
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Longtime Fool contributor Rick Munarriz has been trading exclusively through discount brokers since 1990, but he does not own shares in any of the companies in this story. The Fool has a disclosure policy. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.