THE BUSINESSWEEK 50 RANKINGS + 25

57

E*Trade Financial

Online brokerage companies rebounded strongly from the depths of the three-year bear market, but none more so than E*Trade Financial. The online broker ended 2006 with 4.4 million accounts and customer assets of $195 billion, up 10% from 2005. That helped E*Trade notch its fourth year in a row of record profits as net income jumped 46%, to $626.8 million. To stay on top, E*Trade continued to roll out innovative new products and services, like a loan optimization software program to help customers reduce their borrowing costs. And it added more bank-like features, such as letting people over 59½ use an IRA account to pay bills online. CEO Mitch Caplan also expanded the company’s network of registered investment advisers, who cater to more upscale customers, by acquiring a Dallas-based investment advisory boutique to complement similar independently run, but E*Trade-owned, firms based in Boston, New York, and Los Angeles. Expect more acquisitions on that front in 2007.

Overall Grade

A-

Market Data

ETFC

Market Value
(2/28/2007)

$9.8 Billion

Profitability*

25.3%

B

Sales Growth Rate**

25.0%

B+

12-Month Sales

$3.8 Billion

12-Month Net Income

$0.6 Billion

Total Return Past 12 Months

-9.7%

Past 36 Months

61.4%

Economic SectorFinancials
IndustryInvestment Banking & Brokerage
The overall sector letter grade reflects how the weighted average of the return on income, or return on equity, and sales growth grades compare with others in the same sector. For the overall grade as well as the ROE/ROI and sales growth grades, an "A" places a company in the top 7% of its sector and an "A-" in the top 14% of the sector. The actual ranking was done using the underlying numerical measures. Grades are for information only.
* For nonfinancial companies, three-year average pretax operating profit before interest and special items as a percentage of average invested capital. For financial companies, pretax profits as a percentage of average shareholder's equity.
*Three-year average annual sales growth based on the most recently reported 36 months, calculated using the least-squares method.

Mitchell Caplan

Mitchell Caplan, 49

CEO since 2003


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Data as of 2/28/07 provided by Standard & Poor's Compustat