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E*TRADE Beats Earnings, Revenue Estimates for 2Q17

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Part 6
E*TRADE Beats Earnings, Revenue Estimates for 2Q17 PART 6 OF 7

A Look at E*TRADE’s Valuations in 2Q17

Discounted valuations

E*TRADE (ETFC) stock received a one-year price target of $43.50 per share from Wall Street analysts, which reflects an ~9.2% increase from its current price. E*TRADE announced a share repurchase program of $1.0 billion. The company has repurchased $26.8 million in common shares by repurchasing 0.7 million shares as of July 31, 2017. 

A Look at E*TRADE’s Valuations in 2Q17

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E*TRADE has a price-to-book ratio of ~1.8x, and its peers’ average price-to-book ratio stood at ~2.7x, which reflects discounted valuations. The price-to-book ratios of E*TRADE’s peers are as follows:

  • Gain Capital Holdings (GCAP): ~1.1x
  • Interactive Brokers Group (IBKR): 2.9x
  • TD Ameritrade (AMTD): ~4.2x

E*TRADE saw a marginal increase in consolidated balance sheet assets in 2Q17 compared to 4Q16. In 2Q17, its total assets stood at $58.8 billion and in 4Q16, its total assets stood at $49.0 billion.

Price-to-cash-flow ratio

E*TRADE (ETFC) has a price-to-cash-flow ratio of ~7.7x on a trailing-12-month (or TTM) basis. On the other hand, the TTM price-to-cash-flow ratios of its brokerage (XLF) peers are as follows:

  • Charles Schwab (SCHW): ~32.6x
  • TD Ameritrade (AMTD): ~21.1x
  • Interactive Brokers Group (IBKR): ~21.2x
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