E*TRADE Gains On Leadership Transition, Deal Completion

E*TRADE Financial Corporation’s (NASDAQ:ETFC) gained around 2.5% to close at $27.20, following the announcement of a management shakeup. The leadership changes followed the closure of the acquisition of online options broker, OptionsHouse, a subsidiary of Aperture New Holdings, Inc.

New CEO Named

Karl A. Roessner has been appointed the Chief Executive Officer (CEO) and will join E*TRADE’s Board. He will be succeeding Paul T. Idzik, who has been the CEO since Jan 2013. Roessner had joined E*TRADE in 2009, and has been serving as its Executive Vice President and General Council over the past seven years.

Additionally, Rodger A. Lawson, Chairman of Board, has been elevated to Executive Chairman of E*TRADE.

Further, Michael Curcio, former CEO of Aperture New Holdings, will be the Chief Brokerage Officer, while Kevin T. Kabat will serve as the Lead Independent Director. Michael had served as E*TRADE’s President before he left the company in 2013.

Why the Shakeup?

E*TRADE announced the leadership change with a view to better align the company for growth.

The company announced the completion of OptionsHouse transaction for a cash consideration of $725 million. The agreement was entered in Jul 2016.

The Executive Chairman of E*TRADE said, "With the OptionsHouse transaction drawn to a close, we have a significant opportunity to reconfigure the Company's leadership to better focus on growing the business both organically and inorganically."

The company anticipates fortifying its derivatives capabilities as well as expanding its customer base with the joining of OptionsHouse’s active, derivative-centric traders. As announced earlier, the company expects the transaction to be relatively neutral to earnings in 2017, but is anticipated to be accretive in 2018.

Further, Roessner said, “With leadership firmly installed, on a parallel track, we will continue pursuing capital deployment initiatives through balance sheet growth, share repurchases, and additional acquisitions, should we find attractive opportunities that offer value to the business and compelling returns for our shareholders".

E*TRADE provides financial services like online brokerage and related banking products and services to retail investors. The company’s strength lies in its revenue growth and expanding profit margins.

Currently, E*TRADE Corporation carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space include Yintech Investment Holdings Ltd. (NASDAQ:YIN) sporting a Zacks Rank #1 (Strong Buy), Evercore Partners (NYSE:EVR) and Greenhill & Co., Inc. (NYSE:GHL) , both holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.


Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>

E TRADE FINL CP (ETFC): Free Stock Analysis Report

GREENHILL & CO (GHL): Free Stock Analysis Report

EVERCORE PARTNR (EVR): Free Stock Analysis Report

YINTECH INVSTMT (YIN): Free Stock Analysis Report

Original post

Zacks Investment Research