from Briefing.com...
11:59 ET ******
National Discount Brokers (NDB) 41 1/8 +10 1/8: If there was ever a frustrated investor in this market, it is the investor in an online brokerage stock. The volume at the Nasdaq has been huge since the technology run began last October, and on many days, it hasn't been too shabby at the NYSE. The online firms thrive amid such favorable trading conditions as it enhances their ability to attract new customers and to capitalize on the commissions generated from heavy trading days. The fact that volume has been so strong and that earnings prospects look bright for these companies has been no mystery, but for all of the bullish banter surrounding these companies and the tech sector's bullish bias, it seems almost inexplicable as to why many of the stocks of online firms have languished. In part, the underperformance has been attributed to growing competition and concerns over margin pressures as transaction costs are reduced, and advertising costs are increased, to retain and to attract customers. Another element weighing on the stocks perhaps is the anticipation of the long-awaited tech selloff. Typically, the fortunes of these stocks are tied closely to the performance of the tech sector. Obviously, there has been a disconnect in that regard recently as investors have seemed reluctant to take long positions, fearing the best of times may soon be over, and having been somewhat turned off by the fact that these stocks have failed to benefit from the nearly ideal operating conditions. Today, however, they are showing no reluctance, particularly in the case of National Discount Brokers, which confirmed what so many knew about the online brokerage business-- but failed to act on-- with an announcement that it expected to exceed analyst earnings and revenue projections by a substantial amount. Prior to the announcement, consensus estimates were for NDB to post a profit of $0.14 per share for its fiscal third quarter and a profit of $0.58 per share for its fiscal year. Citing the record volume, and the trading opportunities it created for its Sherwood Securities unit and NDB.com's brokerage business, NDB said it expected third quarter earnings to be in the range of $0.95 to $1.05, and that revenues should be between $125 mln to $135 mln. Yes, things are good for NDB, but unlike many of its peers, the market had been coming around to that realization. For the month of February, shares of NDB have jumped 89% as heavy trading conditions combined with attractive valuations and recent marketing agreements with Yahoo! and Go2Net have struck a chord with investors. Today, the stock is up 33%-- a fitting leap on Leap Day and a fitting response for a company that says its quarterly results will exceed what the company had been expected to earn for its entire fiscal year by 65% to 81%.-- PJO |
