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Why E*TRADE (ETFC) Stock should be Added to Portfolio Now
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E*TRADE Financial Corporation appears a solid bet now, backed by online innovations, launch of products and services, as well as the company’s renewed focus on strengthening its brokerage business, with the target of achieving 2–3% incremental growth. The company’s strong trading volumes, client focus, restructuring measures and balance-sheet growth are anticipated to yield positive results for the stock.
Moreover, the recent interest rate hike is likely to further stabilize the top line, thus creating a buying opportunity for long-term horses. Therefore, E*TRADE is a right choice now, which continues to depict robust fundamentals and improving prospects.
Additionally, E*TRADE’s shares have gained 7.0% year to date compared with the slight decline in the Zacks categorized Investment Bank industry.
Why E*TRADE is an Attractive Pick
Benefit from Rate Hike: With a rise in rates, brokerage firms are expected to engage in more investment activities. As brokerage firms earn interest income on un-invested cash in customer accounts, this rate hike will enable the brokerage firms to invest at higher rates. As E*TRADE currently derives nearly 60% of its total net revenue from net interest income, the company is set to benefit from the recent rate hike.
Strong Organic Growth: E*TRADE, with the introduction of brokerage products and services, and enhancement of capabilities on professional trading and mobile platforms, remains focused on improving its technology space, in a bid to offer a better digital experience to customers. Notably, in an effort to boost its derivatives platform, E*TRADE completed the acquisition of the online options broker – OptionsHouse – in Sep 2016. The company is focused on derivatives mix, with a target of increasing it to 35% of DARTs and also set managed account assets under management (AUM) target of $6 billion, within the next two years. It aims to achieve 2–3% improvement in its rate of annual organic growth, across accounts, assets and trades.
Furthermore, the company’s projected sales growth (F1/F0) of 15.4%, as against the nil industry average, indicates consistent upward momentum in revenues.
Earnings Strength: E*TRADE witnessed earnings growth of 6.7% in the last three–five years. In addition, the company’s long-term (three–five years) estimated EPS growth rate of 12.8% promises rewards for investors, over the long run. Also, the company has recorded an average positive earnings surprise of 20.7% in the trailing four quarters.
Strong Leverage: E*TRADE’s debt/equity ratio is valued at 0.23 compared to the S&P 500 average of 0.69, indicating relative lower debt burden. It highlights the financial stability of the company despite an unstable economic environment.
Favorable Zacks Rank: E*TRADE currently carries a Zacks Rank #2 (Buy). The bullish rank is being driven by upward earnings estimate revisions, for the last 60 days. For 2017, the Zacks Consensus Estimate increased 5.4% to $1.95; while for 2018, it inched up 1.3% to $2.27.
Stocks to Consider
Raymond James Financial, Inc. (RJF - Free Report) has been witnessing upward estimate revisions, for the last 30 days. Further, the stock has jumped over 12.8% so far, this year. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Investment Technology Group, Inc. has been recording upward estimate revisions, for the last 60 days. In addition, the company’s shares have risen nearly 7.9% so far, this year. The stock currently carries a Zacks Rank #2.
Interactive Brokers Group, Inc. (IBKR - Free Report) has been witnessing upward estimate revisions, for the last 30 days. Over the last three months, the company’s share price has been up around 5.1%. It holds a Zacks Rank #2.
Zacks' Hidden Trades
While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them?
Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors.
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Why E*TRADE (ETFC) Stock should be Added to Portfolio Now
E*TRADE Financial Corporation appears a solid bet now, backed by online innovations, launch of products and services, as well as the company’s renewed focus on strengthening its brokerage business, with the target of achieving 2–3% incremental growth. The company’s strong trading volumes, client focus, restructuring measures and balance-sheet growth are anticipated to yield positive results for the stock.
Moreover, the recent interest rate hike is likely to further stabilize the top line, thus creating a buying opportunity for long-term horses. Therefore, E*TRADE is a right choice now, which continues to depict robust fundamentals and improving prospects.
Additionally, E*TRADE’s shares have gained 7.0% year to date compared with the slight decline in the Zacks categorized Investment Bank industry.
Why E*TRADE is an Attractive Pick
Benefit from Rate Hike: With a rise in rates, brokerage firms are expected to engage in more investment activities. As brokerage firms earn interest income on un-invested cash in customer accounts, this rate hike will enable the brokerage firms to invest at higher rates. As E*TRADE currently derives nearly 60% of its total net revenue from net interest income, the company is set to benefit from the recent rate hike.
Strong Organic Growth: E*TRADE, with the introduction of brokerage products and services, and enhancement of capabilities on professional trading and mobile platforms, remains focused on improving its technology space, in a bid to offer a better digital experience to customers. Notably, in an effort to boost its derivatives platform, E*TRADE completed the acquisition of the online options broker – OptionsHouse – in Sep 2016. The company is focused on derivatives mix, with a target of increasing it to 35% of DARTs and also set managed account assets under management (AUM) target of $6 billion, within the next two years. It aims to achieve 2–3% improvement in its rate of annual organic growth, across accounts, assets and trades.
Furthermore, the company’s projected sales growth (F1/F0) of 15.4%, as against the nil industry average, indicates consistent upward momentum in revenues.
Earnings Strength: E*TRADE witnessed earnings growth of 6.7% in the last three–five years. In addition, the company’s long-term (three–five years) estimated EPS growth rate of 12.8% promises rewards for investors, over the long run. Also, the company has recorded an average positive earnings surprise of 20.7% in the trailing four quarters.
Strong Leverage: E*TRADE’s debt/equity ratio is valued at 0.23 compared to the S&P 500 average of 0.69, indicating relative lower debt burden. It highlights the financial stability of the company despite an unstable economic environment.
Favorable Zacks Rank: E*TRADE currently carries a Zacks Rank #2 (Buy). The bullish rank is being driven by upward earnings estimate revisions, for the last 60 days. For 2017, the Zacks Consensus Estimate increased 5.4% to $1.95; while for 2018, it inched up 1.3% to $2.27.
Stocks to Consider
Raymond James Financial, Inc. (RJF - Free Report) has been witnessing upward estimate revisions, for the last 30 days. Further, the stock has jumped over 12.8% so far, this year. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Investment Technology Group, Inc. has been recording upward estimate revisions, for the last 60 days. In addition, the company’s shares have risen nearly 7.9% so far, this year. The stock currently carries a Zacks Rank #2.
Interactive Brokers Group, Inc. (IBKR - Free Report) has been witnessing upward estimate revisions, for the last 30 days. Over the last three months, the company’s share price has been up around 5.1%. It holds a Zacks Rank #2.
Zacks' Hidden Trades
While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them?
Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors.
Click here for Zacks' secret trade>>