After Charles Schwab's (NASDAQ:SCHW) respectable showing earlier this week, it was E*Trade's (NYSE:ET) turn to sing for the judges. As far as discount-broker crooners go, E*Trade came off a little bit flat. The company did post earnings of $0.35 a share, or $0.36 a share before acquisition-related charges. On that adjusted basis, the company nailed Wall Street's bottom-line target. It was also comfortably ahead of last year's $0.28-per-share showing.

Climbing up the income statement, it gets a bit troublesome; net revenue improved by 39% to hit $582 million. Sounds good, but it really wasn't enough. Analysts were expecting the top line to clock in at $594 million.

Yes, growing the top line by 39% is three times the more modest 13% revenue surge we saw at Schwab for the period -- but what does "acquisition-related charges" mean? That's right, some of this growth was the result of the company's recent acquisitions. Over the past year, E*Trade has completed a $1.6 billion deal for BrownCo. and a $700 million acquisition of Harrisdirect. Ameritrade (NASDAQ:AMTD) is another peer that has been active in consolidating this fragmented sector.

There is no such thing as a free lunch, and in E*Trade's case, we find that shares outstanding have risen 15% higher over the past year. So revenue per share -- a metric that I find is more fitting when we want to gauge performance in the case of acquisitive companies -- is actually up just shy of 21% over the past year.

That's still pretty good. There was some sequential weakness. The company also simply narrowed its guidance for all of 2006 (instead of raising its outlook the way it did three months ago). I can forgive that, even if the market may be left a little disappointed. Keep in mind that E*Trade had beaten analyst profit targets for five straight quarters before simply hitting the mark last night. Thankfully, analysts have been targeting earnings per share to come in at $1.47 this year, and that's comfortably in the center of the company's new range of $1.45 to $1.50. E*Trade is trading at a somewhat reasonable 16 times this year's profitability. Ameritrade and Schwab are trading at 19 and 21 times their 2006 earnings, respectively.

It may get trickier now that upstart has made a big splash in introducing an online trading platform that offers commission-free stock trades. Bank of America (NYSE:BAC) will also be testing free trades at its retail brokerage unit as a way to drum up mainstream banking accounts. The challenge may do the industry some good. A little competition never hurt. If anything, it may be the elixir that produces even more consolidation in the sector.

Bank of America is a Motley Fool Income Investor pick. Charles Schwab is a Motley Fool Stock Advisor recommendation. The Motley Fool's sponsored broker comparison table lets you compare several of the discounters that advertise on our site.

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. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.