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E*TRADE Financial’s Valuations after Its 1Q18 Results

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Nov. 20 2020, Updated 5:33 p.m. ET

Premium valuations

E*TRADE Financial Corporation (ETFC) has a price-to-book ratio of ~2.2x on an NTM (next-12-months) basis, reflecting its premium valuations. The company’s competitors have an average price-to-book ratio of 2.0x. E*TRADE’s competitors Goldman Sachs (GS), Charles Schwab Corporation (SCHW), and Morgan Stanley (MS) have NTM price-to-book ratios of ~1.2x, 3.6x, and ~1.2x, respectively.

E*TRADE’s strong 1Q18 results could be the primary reason for its premium valuations. Trade war tensions increased volatility in the equity markets, which improved the company’s trading volumes. The company reported daily average revenue trades (or DARTs) of 309,469 in 1Q18, implying a sequential rise of 31.0% and a YoY rise of 49.0%.

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What could impact E*TRADE’s business?

Moving forward, E*TRADE’s performance is expected to depend on the performance of the global financial markets, which typically impact the company’s trading volumes. So, any variations in the economic environment that could cause unfavorable momentum in the global financial markets might subdue the company’s business.

E*TRADE could witness increasing valuations throughout fiscal 2018. The Federal Reserve is expected to announce two more rate hikes this year, which is expected to positively impact the company’s interest revenues.

E*TRADE’s price-to-book ratio is ~2.3x on an LTM (last-12-months) basis. Its competitors (XLF) Goldman Sachs, Charles Schwab Corporation, and Morgan Stanley have LTM price-to-book ratios of ~1.1x, ~4.0x, and 1.2x, respectively.

Check out all the data we have added to our quote pages. Now you can get a valuation snapshot, earnings and revenue estimates, and historical data as well as dividend info. Take a look

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