Boost in Trading Helps ETrade’s Profit Rise 55%

ETrade Financial Corp. said Wednesday that first-quarter profit rose 55% to a record as rising stocks spurred customers to trade more and acquisitions added accounts.

The company raised its earnings forecast for the year after net income jumped to $142.5 million, or 33 cents a share, from $92 million, or 24 cents, a year earlier. Revenue surged 43% to $593.3 million.

ETrade shares climbed 94 cents to $26.86.

Individual investors bought and sold more stocks as the Standard & Poor’s 500 index rose for a fourth straight quarter, boosting ETrade’s revenue from commissions and margin loans. Average daily client trades more than doubled to 181,000, spurred in part by its purchases last year of Harrisdirect from Canada’s BMO Financial Group and BrownCo. from JPMorgan Chase & Co..

“When you have a trading environment like the first quarter, you really get a nice earnings magnification,” said Seth Dadds, an analyst at Garp Research who rates the stock a “buy” and owns an undisclosed number of shares. “This is a volume business, so greater volume drops straight to the bottom line.”

ETrade raised the top range of its profit forecast for the full year by 3.6%. Earnings per share will be $1.30 to $1.45, compared with a December forecast of $1.25 to $1.40.

Like larger competitors Fidelity Investments and Charles Schwab Corp., ETrade has slashed its commission rates to compete for customers as computer advances make it cheaper and faster to process trades.