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Bull of the Day: E*TRADE Financial Corporation (ETFC)

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Founded in 1982 and headquartered in New York City, E*TRADE Financial Corporation (ETFC) provides online brokerage and related products and services primarily to individual retail investors.

The company IPO’d in 1996 and currently has 30 retail branches across the US and approximately 3,600 employees. They also operate a bank primary for maximizing the value of deposits generated through brokerage business.

Better-than-expected Results

The company reported Q4 adjusted earnings of 64 cents per share, beating the Zacks Consensus Estimate of 62 cents. Net revenue for the reported quarter came in at $637 million, also ahead of the Zacks Consensus Estimate of $633 million, and up 25.1% from the year-ago quarter.

“The fourth quarter results we delivered placed an exclamation mark on an exceptional year, and I am extremely proud of what the team accomplished. Amid a fiercely competitive environment, and unprecedented markets, we were able to stay focused on our efforts and drive results for shareholders,” said the CEO.

The brokerage also announced a definitive agreement to acquire more than one million retail brokerage accounts with $18 billion in customer assets from Capital One Financial Corporation for a price of $170 million.

Excellent Industry Outlook

Investors and traders now increasingly prefer digital platforms for trading. Per ETFC, the direct space now represents more than 20% of the total brokerage industry. With cutting edge technology and continued innovation, digital brokerages may continue to gain market share.

E*TRADE’s digital platform is further complemented by professional advice and support provided by 24/7 customer service and over 300 financial consultants available via phone or at branches.

Rising Estimates

Analysts have been raising their estimates for the company after better-than-expected results. Zacks Consensus Estimates for the current and next year have increased to $3.25 share and $3.68 per share from $2.62 and $2.95 respectively, 60 days back.

The company has beaten in 19 out of last 20 quarters. Over the past four quarters, the average surprise was 11%.

E*TRADE Financial Corporation Price, Consensus and EPS Surprise

E*TRADE Financial Corporation Price, Consensus and EPS Surprise | E*TRADE Financial Corporation Quote


The Bottom Line

ETFC is a Zacks Rank#1 (Strong Buy) stock. Further Momentum Style Score of “A” and Zacks Industry Rank is in top 12% also indicate strong chances of outperformance in the short- to medium- term.

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