The online broker posted a quarterly deficit of $0.02 a share last night, substantially better than last year's $0.41-per-share loss. Analysts were expecting $0.03 a share in red ink, while rivals TD AMERITRADE
Daily average revenue trades of 155,000 are down 2% from last quarter and 11% from the same quarter a year earlier, but most of the other metrics are encouraging. Accounts, client assets, and margin receivables are all on the rise.
"E*TRADE's first-quarter results show improving trends and reflect continued progress toward our goal of returning to profitability," new CEO Steven Freiberg notes in yesterday's earnings report.
He's not patting his own back here, since the former Citigroup exec didn't assume his new position until after the quarter ended.
His timing is pretty good, though. Even E*TRADE's banking arm that dragged the broker into the nasty tangles of the subprime meltdown is seeing better days. It generated positive risk-based capital for the first time in nearly two years.
E*TRADE's turnaround is likely to heat up the acquisition chatter, even if Freiberg's best move is to run the discounter as if he's going to be there for the long haul.
The broker will be asking its shareholders to approve a reverse split in a move to woo more investors than speculators. The negative attitude toward reverse splits is changing now that AIG
So what will it be for E*TRADE? Will its organic turnaround fuel juicy gains, or will the siren calls of sector consolidation swallow it whole at a reasonable premium? Either way, it seems as if Freiberg -- and E*TRADE shareholders -- are in a win-win situation.
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Longtime Fool contributor Rick Munarriz has been trading exclusively through discount brokers since 1990, but he owns no shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Foolhas a disclosure policy.