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Here's Why E*TRADE (ETFC) Stock is Worth Betting on Now

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E*TRADE 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.

Additionally, E*TRADE’s shares have gained around 4.6%, year to date, compared with around 18.8% growth registered by the industry.

Further, it has been successful in gaining analysts’ confidence. Its current-year earnings estimate has been revised slightly upward, over the last 60 days, and 2.8% for 2020. As a result, the stock currently carries a Zacks Rank #2 (Buy).



Why E*TRADE is an Attractive Pick

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. The company is focused on derivatives mix and crossed the target of increasing it to 35% of DARTs in third-quarter 2019, and also set managed account AUM target of $6 billion within the next two years. The company 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 1.11%, as against the nil industry average, indicates continued upward momentum in revenues.

Earnings Strength: E*TRADE witnessed earnings growth of 39.06% over the last three-five years. In addition, the company’s long-term (three-five years) estimated EPS growth rate of 7.48% promises rewards for investors, over the long run. Also, the company recorded average positive earnings surprise of 6.68% over the trailing four quarters.

Strong Leverage: E*TRADE’s debt/equity ratio is valued at 0.24 compared to the industry average of 0.41, indicating relative lower debt burden. It highlights the financial stability of the company despite an unstable economic environment.

Superior Return on Equity: E*TRADE has a return on equity of 18.41% compared with the industry average of 11.84%. This indicates that the company is efficient in utilizing shareholder funds.

Stock Looks Undervalued: The stock currently has a Value Score of A. The Value Score condenses all valuation metrics into one actionable score that helps investors steer clear of “value traps” and identify stocks that are truly trading at a discount. Our research shows that stocks with a Style Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.

Other Stocks to Consider

TD Ameritrade Holding Corporation (AMTD - Free Report) has been witnessing upward estimate revisions for the past 60 days. Moreover, this Zacks #2 Ranked stock has rallied more than 3%, year to date. You can see the complete list of today’s Zacks #1 Rank stocks here.

Piper Jaffray Companies has been witnessing upward estimate revisions for the past 60 days. Further, the company’s shares have gained 21.3%, year to date. At present, it carries a Zacks Rank of 2.

BlackRock, Inc. (BLK - Free Report) has been witnessing upward estimate revisions for the past 60 days. Additionally, the stock has jumped around 28.1%, year to date. It currently carries a Zacks Rank #2.

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