Bloomberg News

E*Trade Declines After Earnings Miss Estimates: New York Mover

January 26, 2012

Jan. 26 (Bloomberg) -- E*Trade Financial Corp. shares fell the most in more than five months after the online brokerage reported results that missed analyst estimates and Sandler O’Neill & Partners LP cut its rating.

Fourth-quarter sales were $475 million, falling short of the $489.1 million average analyst estimate, New York-based E*Trade said yesterday. The company lost 2 cents a share, compared with a loss of 11 cents the year earlier.

While E*Trade posted three quarters of profits in 2011, it hasn’t delivered positive fourth-period earnings since 2006, in part because of losses after the subprime market collapsed in 2007, data compiled by Bloomberg show. The brokerage’s net interest margins will be lower after the Federal Reserve signaled yesterday it would keep rates low through at least late 2014, according to Sandler O’Neill analyst Rich Repetto, who cut the shares to “hold” from “buy.”

“The interest rate environment has likely pushed out E*Trade’s earnings power by about a year,” New York-based Repetto wrote in a note today. “We think E*Trade shares have limited upside in the short/moderate term, especially with the stock up” for 2012.

E*Trade shares declined 12 percent to $8.26 at 10:39 a.m. New York time, the biggest loss since Aug. 8 and the most in the Standard & Poor’s 500 Index. The stock was up 18 percent in 2012 through yesterday.

--Editors: To contact the reporter on this story: Whitney Kisling in New York at wkisling@bloomberg.net.

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net.


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