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E*TRADE (ETFC) to Report Q2 Earnings: What's in the Offing?

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E*TRADE Financial Corporation (ETFC - Free Report) is scheduled to report second-quarter 2017 results on Jul 20. While top line is expected to grow year-over-year, earning per share will likely remain flat.

In the previous quarter, E*TRADE Financial’s earnings had surpassed the Zacks Consensus Estimate by 9 cents. Increased net revenue and a benefit from provisions aided results. Further, the quarter witnessed an increase in daily average revenue trades along with growth in customer accounts. However, the positives were partially offset by higher expenses.

Notably, E*TRADE Financial delivered positive earnings surprises in each of the trailing four quarters, with an average beat of 20.7%.

The stock has gained 8.6% over the last six months versus the Zacks categorized Financial - Investment Bank industry’s decline of nearly 1%.

E*TRADE Financial Corporation Price and EPS Surprise

Earnings Whispers

Will the upcoming earnings release give a further boost to the E*TRADE’s stock? A lot depends on whether the firm posts a beat for the fifth straight quarter. However, our quantitative model does not conclusively predict a beat. Here’s why:

E*TRADE doesn’t have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or at least 2 (Buy) or 3 (Hold) — 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 0.00%. This is because the Most Accurate Estimate matches the Zacks Consensus Estimate of 48 cents.

Zacks Rank: E*TRADE’s Zacks Rank #2 increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of a positive earnings surprise.
Factors Influencing Q2 Results

Margin Pressure to Ease: The rate hikes in 2017 are likely to ease margin pressure. However, lower treasury yields might curb this improvement to some extent.

Growth in Client Assets: On the back of decent equity performance in the quarter, evident from 3% growth in the S&P 500 Index, it is likely that the company will experience a rise in client assets.

Lower Trading Revenues: Owing to low volatility in the bond and equity markets, E*TRADE Financial’s trading revenues might decline in the second quarter.

Activities of E*TRADE during the quarter were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for the quarter remained stable over the last seven days.

Stocks that Warrant a Look

Here are some stocks worth considering, as they have the right combination of elements to post an earnings beat this quarter.

Artisan Partners Asset Management Inc. (APAM - Free Report) is slated to report second-quarter results on Jul 24. It has an Earnings ESP of +1.72% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

T. Rowe Price Group, Inc.’s (TROW - Free Report) Earnings ESP is +2.38% and it carries a Zacks Rank #2. The company is expected to release second-quarter results on Jul 25.

Lazard Ltd. (LAZ - Free Report) has an Earnings ESP of +7.69% and a Zacks Rank #2. It is scheduled to report second-quarter results on Jul 27.

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