On Apr 29, we issued an updated research report on E*TRADE Financial Corporation ETFC. The company’s focus on core operations, strategic initiatives and improving interest rates will likely support its top-line growth in the near term. Further, its efforts to boost the derivatives platform have resulted in strong outcomes. However, elevated expenses will likely hurt the bottom line growth in the near term.
E*TRADE’s Zacks Consensus Estimate for 2019 earnings has been revised 2.9% upward and for 2020, the same has been revised 1.1% north, over the past 30 days. Currently, E*TRADE Financial carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In order to boost its top-line performance, E*TRADE Financial has launched several products and services. Further, the company continues to improve its technology space so that it can offer a better digital experience to its customers. Such efforts will likely support its growth over the long term.
Also, the company’s net interest margin has improved considerably, over the last five years. The company expects to benefit from the favorable interest-rate environment, moving ahead. Further, E*TRADE continues to streamline balance-sheet risk by lowering its credit risk in legacy loan portfolios.
Notably, in September 2016, the company acquired an online option broker — OptionsHouse — to boost its derivative platform. The company is focused on derivatives mix with a target of increasing it to 35% of DARTs and also set managed account AUM target of $6 billion within the next two years. In addition, it aims to achieve 2-3% improvement in its rate of annual organic growth, across accounts, assets and trades. We expect its several ongoing initiatives and improving customer services to lower the attrition rate of the annual brokerage accounts and support its growth strategy.
Moreover, its capital-deployment activities reflect the company’s capital strength. In October 2018, the company announced a new share-repurchase plan worth $1 billion after completing the existing one and also initiated common stock dividend.
However, escalating expenses, mainly due to the company’s focus on growing its franchise, will likely hurt the bottom line in the near term. It also remains exposed to risks of losing its client base to other renowned players in the industry.
E*TRADE’s price performance seems impressive. The stock has gained 5.3% over the past three months compared to the industry’s rise of 1%.
Stocks to Consider
Raymond James Financial RJF witnessed an upward earnings estimate revision of 4.5% for the current year in the past 60 days. Its share price gained 2.2%, over the past one year. The stock currently flaunts a Zacks Rank of 1.
Stifel Financial Corporation’s SF ongoing-year earnings estimate has been revised 5.6% upward over the past 60 days. Its share price gained 2.7%, over the past one year. The stock currently sports a Zacks Rank of 1.
Ladenburg Thalmann Financial Services Inc LTS witnessed an upward earnings estimate revision of 28.6% for 2019 in the past 60 days. Its share price gained 12.1%, over the past one year. The stock currently carries a Zacks Rank #2 (Buy).
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E*TRADE Financial Corporation (ETFC) : Free Stock Analysis Report
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