Is ETFC a Sure Shot? Im looking at ETFC like a HAWK
With real estate market in the West bottoming out and even coming back a bit, I find E-trade’s stock price very attractive at these levels. E-trade’s balance sheet shows about $5 billion in equity. If you take away the recent loan write downs; which shouldn’t be as much an issue going forward, E-trade goes from being marginally profitable to extremely profitable. E-trade was profitable for 2011; even though the loan losses hurt them in the last quarter... which is all the analysts seem to be looking at. E-trade has very profitable margin receivables of $4.8 bill... a $500 mill deferred tax asset... loan portfolio coming down by about $2.8 bill a year & currently at $12.3 bill... $823 loan loss allowance... $1.5 bill of corporate debt which E-trade can hopefully eliminate in 2012... a growing institutional business... actually reducing operating expenses while expanding the # of brokers... projecting reductions in fdic & financing costs as their balance sheet improves such as retiring the 12.5% lien notes... in summary, yes, Etrade had a lousy quarter but they should have some great quarters going forward. In nothing else, E-trade will be a very compelling buy-out candidate in 2012.