This year hasn't been kind to derivatives broker and Global Gains pick MF Global (NYSE:MF). Plagued by false rumors and a legitimate rogue trader, the stock has lost nearly four-fifths of its value year to date. In that context, the firm's fiscal first-quarter results present a useful opportunity to check the state of the business.

In MF Global's situation, the EPS number alone isn't very telling -- these are extraordinary circumstances. (In case you're wondering, earnings per share did come in ahead of the consensus estimate.) To verify that MF is stabilizing its franchise, you've got to look at client balances, trading volume, and other operational metrics, too.

Short-term funding is a slippery slope
MF has wisely decreased its dependency on short-term funding, thus avoiding a weakness that ultimately sent Bear Stearns into the arms of JPMorgan Chase (NYSE:JPM). MF's $1.4 billion recapitalization appears to have given its customers confidence that they can trade through the company, albeit at a heavy price for shareholders.

Solid volume growth at exchange operators such as CME Group (NASDAQ:CME), NYMEX Group (NYSE:NMX), IntercontinentalExchange (NYSE:ICE), and Nasdaq OMX Group (NASDAQ:NDAQ) suggested that market volatility could be a tailwind for MF. Sure enough, volume grew at 17% year over year. However, with a shift to electronic trading, the average rate per contract fell by more than 10%.

I don't blame MF Global for hiring a trader who ultimately went rogue; that can happen at any firm. But I do blame it for lacking the culture and processes necessary to ferret this character out before he did substantial damage to the firm's reputation.

When cheap isn't cheap enough
At less than six times FY2010 estimated earnings, MF Global looks cheap, especially if it achieves its estimated five-year earnings-per-share growth rate of 16%. Nevertheless, it's a turnaround situation, with all the risks that entails. As a risk-averse investor, even if the shares were outrageously cheap, I simply couldn't get excited about the idea of buying them -- especially in a market in which some truly outstanding businesses are selling for less than intrinsic value.

Related Foolishness:

Fool contributor Alex Dumortier, CFA, has no beneficial interest in any of the stocks mentioned in this article. MF Global is a Motley Fool Global Gains selection. JPMorgan Chase is a Motley Fool Income Investor pick. Nasdaq OMX Group is a Motley Fool Inside Value recommendation. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.