Bull of the Day: E*TRADE Financial (ETFC)
Founded in 1982 and headquartered in New York City, E*TRADE Financial Corporation (ETFC) provides online brokerage and related products and services primarily to individual retail investors.
The company IPO’d in 1996 and currently has 30 retail branches across the US and approximately 3,400 employees. They also operate a bank primary for maximizing the value of deposits generated through brokerage business.
Better-than-expected Results
The company reported Q2 adjusted earnings of 52 cents per share, beating the Zacks Consensus Estimate of 48 cents. Net revenue for the reported quarter came in at $577 million, also ahead of the Zacks Consensus Estimate of $554.3 million, and up 21.7% from the year-ago quarter.
“First, customer activity held strong, while derivatives increased to a record portion of customer trades during the quarter. Margin balances reached 3-year highs and net new brokerage assets represented our strongest second quarter on record,” said the CEO.
The brokerage also announced a $1 billion share repurchase program, which they expect to complete by the end of 2018.
Excellent Industry Outlook
Investors and traders now increasing prefer digital platforms for trading. Per ETFC, the direct space now represents more than 20% of the total brokerage industry. With cutting edge technology and continued innovation, digital brokerages may continue to gain market share.
E*TRADE’s digital platform is further complemented by professional advice and support provided by 24/7 customer service and over 300 financial consultants available via phone or at branches.
Rising Estimates
Analysts have been raising their estimates for the company after better-than-expected results. Zacks Consensus Estimates for the current and next year have increased to $2.19 per share and $2.42 per share from $1.95 and $2.27 respectively.
The company has beaten in 17 out of last twenty quarters. Over the past four quarters, the average surprise was 17%.
E*TRADE Financial Corporation Price and Consensus
E*TRADE Financial Corporation Price and Consensus | E*TRADE Financial Corporation Quote
The Bottom Line
ETFC is a Zacks Rank#1 (Strong Buy) stock. Further favorable Zacks Industry Rank also indicates strong chances of outperformance in the short- to medium- term.
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