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E*TRADE Concludes Retail Brokerage Accounts Buyout From COF

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Recently, E*TRADE Financial (ETFC - Free Report) completed the buyout and conversion of around one million retail brokerage accounts, with $15.4 billion in customer assets from Capital One Financial Corporation (COF - Free Report) . The deal worth around $109 million has been inked with an aim of expanding footprint and increasing client base. Notably, customer assets also included $1.6 billion in customer cash as of Nov 2, 2018.

"We are thrilled to welcome these new customers and to show them the best of E*TRADE, including our broad product suite, professional-grade tools, and exceptional service,” said Karl Roessner, chief executive officer of E*TRADE Financial. "This is a fantastic opportunity to materially broaden our footprint, efficiently adding a large number of customers to our highly scalable platform. We are already hard at work to deepen our engagement with these new customers and ensure their experience with us is seamless and first-class,” Roessner added.

The deal is expected to be neutral to earnings in 2018 and accretive by more than 6 cents in 2019 on achievement of full run-rate synergies. Existing corporate cash has likely been used to fund this transaction.

Bottom Line

E*TRADE’s several restructuring measures and balance-sheet growth plans keep us encouraged. While intense competition can have an adverse impact on the company’s customer base and consequently on its profitability, E*TRADE’s focus on core operations and strategic initiatives will likely lead to an improved top-line performance. Additionally, the company will benefit from improving conditions in the domestic economy.

Shares of E*TRADE have gained around 8.1% year to date as against the 9.7% decline witnessed by the industry it belongs to.

Currently, E*TRADE carries a Zacks Rank #2 (Buy).

Other Stocks to Consider

Greenhill & Co., Inc. (GHL - Free Report) has been witnessing upward estimate revisions for the past 30 days. Moreover, this Zacks #1 Ranked (Strong Buy) stock has rallied more than 16% year to date. You can see the complete list of today’s Zacks #1 Rank stocks here.

TD Ameritrade Holding Corporation (AMTD - Free Report) has been witnessing upward estimate revisions for the past 30 days. Also, the company’s shares have gained nearly 4.3%, year to date. It carries a Zacks Rank of 2, at present.

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