Key Things To Watch In E-Trade’s Q1 2017 Earnings

by Trefis Team
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E*Trade Financial (NASDAQ:ETFC) fared well in 2016, and we expect this trend to continue when the company reports its first quarter earnings on April 19th. We believe that interest-earning assets will be the key driver of growth. The Fed raised interest rates by 25-50 basis points twice in the last 4 months, in December 2016 and March 2017. As a result, Charles Schwab’s interest earning assets are growing at a very strong rate, and saw nearly  25% growth in January and February. Consequently, revenues from this segment, which contribute around 56% of the company’s overall revenues, are expected to increase significantly.

Trading commissions account for nearly a quarter of the company’s overall revenues. Although the trading volumes saw around 24% year-over-year growth, most of it is attributed to the acquisition of OptionsHouse. Our primary concern is that the company’s decision to slash its commission per trade from $9.99 to $6.95, following the price cut by rivals such as Ameritrade, Charles Schwab and Fidelity, which could weigh slightly on its results. Since trading commissions generate only a small percentage of the company’s overall revenue, we do not expect the price cut to have a major impact on revenue and EPS growth in the near term.

See Our Complete Analysis For E-Trade Here

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