E*TRADE (ETFC) to Report Q2 Earnings: Is a Beat in Store?
E*TRADE Financial Corporation ETFC is scheduled to report second-quarter 2018 results on Jul 19. The company is expected to witness year-over-year growth in revenues and earnings.
Before we discuss why an earnings beat might be in store, let’s take a look at how the company performed in the last reported quarter.
In the first quarter, E*TRADE pulled off a positive earnings surprise of 11.4%, supported by increased net revenues and benefit from provisions. Further, the quarter witnessed an increase in daily average revenue trades (DARTs) along with growth in customer accounts. However, the positives were partially offset by higher expenses.
Further, E*TRADE has an impressive earnings surprise history. It delivered positive earnings surprises in each of the trailing four quarters, with an average beat of 7.7%.
E*TRADE Financial Corporation Price and EPS Surprise
E*TRADE Financial Corporation Price and EPS Surprise | E*TRADE Financial Corporation Quote
Notably, estimates for the to-be-reported quarter have been revised slightly upward over the last seven days, indicating analysts’ confidence in the stock. Also, the Zacks Consensus Estimate for earnings of 89 cents reflects growth of 71.2% year over year.
Factors That Might Influence Q2 Results
Trading Revenues Might Improve: Despite a sequential slowdown in market volatility, E*TRADE’s trading revenues might have witnessed improvement in the quarter on the back of rise in net new brokerage accounts. The Zacks Consensus Estimate for these accounts is 50,000, a year-over-year increase of 22%.
Further, as the company reported annual increase in DARTs for the months of April and May, commission revenues are likely to have increased during the quarter. The consensus estimate for DARTs is 249,000, up 19.7% year over year.
Revenues Likely to Increase: As net interest income constitutes a significant part of E*TRADE’s revenues, expanding net interest margin on the back of rising interest rates will likely lend support this quarter as well. Also, the Zacks Consensus Estimate for average interest earning assets for the quarter is $61.4 billion, which reflects growth of 18.4% year over year.
Notably, the Zacks Consensus Estimate for sales is $702.4 million, indicating improvement of 21.7% year over year.
Expenses Might Trend Up: The company plans to make several investments in 2018 along with spending money on marketing. This might lead to an increase in expenses during the quarter.
Earnings Whispers
According to our quantitative model, E*TRADE has the right combination of the two key ingredients — positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of an earnings beat.
(You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.)
Zacks ESP: The Earnings ESP for E*TRADE is +0.11%.
Zacks Rank:The stock currently carries a Zacks Rank of 3.
Other Stocks That Warrant a Look
Here are some other stocks worth considering, as they have the right combination of elements to post an earnings beat this quarter.
The Blackstone Group L.P. BX is slated to release results on Jul 19. It has an Earnings ESP of +3.70% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
SunTrust Banks, Inc. STI is scheduled to release results on Jul 20. It has an Earnings ESP of +0.21% and carries a Zacks Rank of 2 (Buy).
KeyCorp KEY has an Earnings ESP of +0.32% and carries a Zacks Rank of 2. The company is slated to release results on Jul 19.
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