Is it just me or is that asterisk star in the E*Trade (NYSE:ET) moniker starting to shine brightly these days? Last night the online discount broker initiated its 2005 guidance by projecting earnings to come in between $0.93 and $1.08 a share on revenue of roughly $1.7 billion.
Yes, E*Trade has come a long way over the past few years. After losing money in 2002, the company earned $0.55 a share in 2003. Back in October it announced that it was on track to earn between $0.92 and $0.97 a share this year.
Obviously E*Trade is at the mercy of the market's gyrations. As long as people are buying and selling stock at healthy levels, the company will perform well. Yet the company has still helped its cause along the way by milking its margin debt and marketing itself effectively enough to land $93.6 billion in customer account assets.
Sure, it can always be better. After Ameritrade (NASDAQ:AMTD) posted a 26% spike in trading volume from October to November, perhaps it's anticlimactic to see E*Trade come in with just an 18% improvement in total daily average revenue trades. And it seems as if E*Trade feels that it's not getting enough respect from the market, as it will be buying another $200 million worth of its stock and debt over the next few months.
But it's toiling away in the right place at the right time. Our Broker Center offers a comparison of just several broker sponsors, yet it's a great place to check out what's out there in terms of the services you need at commission rates that you deem fair. The Internet has helped lower trading costs for individual investors and that means more of your money working for you -- and marginally higher returns as a result of those rock-bottom rates.
While the convenience of one-click comparison shopping may have caused brokers that were established for decades like Schwab (NYSE:SCH) and Toronto-Dominion Bank's (NYSE:TD) TD Waterhouse to lower their rates to remain competitive, it's the consumer that ultimately comes out ahead.
That doesn't mean that the traditional old-school brokerage houses are toast. Next week we will have Bear Stearns (NYSE:BSC) and Morgan Stanley (NYSE:MWD) stepping up to the earnings podium, and it will be interesting to see if they are holding up as well as the ambitious discounters.
Yet at a time when many people are staring at the glistening star on top of their Christmas tree, it's the E*Trade star that's truly sparkling.
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Longtime Fool contributor Rick Munarriz has been investing through online discount brokers since 1991. He likes the sector's chances, but he does not own shares in any companies mentioned in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
