Should You Buy E*TRADE Financial Corporation (ETFC)?
E*TRADE Financial Corporation (NASDAQ:ETFC) saw a decent share price growth in the teens level on the NasdaqGS over the last few months. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s take a look at ETFC’s outlook and value based on the most recent financial data to see if the opportunity still exists. See our latest analysis for ETFC
Is ETFC still cheap?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 9% below my intrinsic value, which means if you buy ETFC today, you’d be paying a reasonable price for it. And if you believe that ETFC is really worth $48.12, then there isn’t much room for the share price grow beyond what it’s currently trading. Although, there may be an opportunity to buy in the future. This is because ETFC’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, ETFC’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What kind of growth will ETFC generate?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at ETFC future expectations. ETFC’s earnings over the next few years are expected to increase by 32.11%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? ETFC’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at ETFC? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on ETFC, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for ETFC, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on E*TRADE Financial. You can find everything you need to know about ETFC in the latest infographic research report. If you are no longer interested in E*TRADE Financial, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
