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Analyst Blog

Shares of E*TRADE Financial Corporation (ETFC - Analyst Report) crafted a new 52-week high, touching $21.80 in the last hour of the trading session on Feb 13. The closing price of this investment brokerage firm represents a return of 92.8% in a year’s time. The trading volume for the session was around 4.4 million shares.

Despite hitting its 52-week high, this Zacks Rank #2 (Buy) stock has plenty of upside left, given its strong estimate revisions over the last 30 days.

Growth Drivers

Impressive fourth-quarter 2014 results, including an improvement in daily average revenue trades (DARTs) and lower provisions, as well as a strong capital position were the primary growth drivers for E*TRADE Financial.

On Jan 23, E*TRADE Financial reported fourth-quarter 2013 earnings of 20 cents per share, in line with the Zacks Consensus Estimate. Results improved significantly from a net loss of 65 cents per share in the prior-year quarter. Moreover, for 2013, excluding the impact of non-recurring items, earnings per share of 70 cents came in well ahead of the prior-year loss of 39 cents.

Further, driven by a strong equity market, DARTs for the full year increased 9.4% year over year while it was up 25% sequentially. E*TRADE Financial also witnessed a substantial rise in its net new brokerage accounts. However, on the flip side, core operating expenses increased 3.1% year over year and net operating interest income decreased 1.2% in the reported quarter.

Estimate Revisions Show Potency

Over the last 30 days, the Zacks Consensus Estimate for fiscal 2014 advanced 3.4% to 90 cents per share, while for fiscal 2015 it moved north 5.5% to $1.14 per share.

Other Investment Brokerage firms worth considering include Investment Technology Group Inc. (ITG - Snapshot Report), LPL Financial Holdings Inc. (LPLA - Snapshot Report) and The Goldman Sachs Group, Inc. (GS - Analyst Report). Both Investment Technology Group and LPL Financial carry a Zacks Rank #1 (Strong Buy) while Goldman holds a Zacks Rank #2 (Buy).