E*TRADE Financial Corporation (NASDAQ:ETFC) Continues Appreciation Post Strong 3Q


Dallas, Texas 11/12/2013 (Financialstrend) – The national investment and brokerage firm E*TRADE Financial Corporation (NASDAQ:ETFC) stock which is tracked by the S&P 500 index posted a strong 5.28% rally during trading on November 8. In fact the stock has been flying high ever since it reported its third quarter operations results in October last week. This upsurge in investor confidence in the stock occurred in spite of dip in revenue during the quarter. The dip in revenue was offset by a big cut in its operating expenses coupled with lower corpus being set aside to accommodate any unforeseen bad loans. The firm had also announced during its 3Q earnings call that it had signed off on divest its “G1 Execution Service” division for $75 million. The buyer was another investment firm Susquehanna International Group LLP. As part of the selloff agreement, E Trade is obliged to pass on a minimum of 70% of equity orders which originate from its customers to Susquehanna till 2018.

The other noticeable financial results were that the trading firm recorded a significant increase in its average daily revenue yielding trades. The trades yielded 13% increase during the quarter. On the flip side the average daily revenue per trade dipped and the firm also saw its income originating from non interest income also side downwards from 3Q12’s $229 million to 3Q13’s $176 million. This non interest income dip was a significant contributor to the close to 15% dip in overall revenue in 3Q to $417 million.

The markets while ignoring the slide in revenue for the time being, liked the fact that the operating expenses came down by close to 19 million to settle at $270.7 million during the quarter in addition to a significant decrease in the provisions the firm had created for servicing bad debt from earlier $141 million to current $37.4 million.