E*TRADE’s Valuations Compared to Its Peers



Lower valuations

E*TRADE Financial’s (ETFC) price-to-earnings ratio is ~17.1x. This highlights its discounted valuation versus the average PE ratio of its peers of ~24.1x. Among the company’s competitors, Charles Schwab (SCHW), TD Ameritrade Holding (AMTD), and Interactive Brokers Group (IBKR) have price-to-earnings ratios of ~22.5x, ~16.7x, and ~33.1x, respectively, on a next-12-months (or NTM) basis.

E*TRADE’s earnings per share and revenues for the first quarter exceeded analysts’ projections. The company’s trading activities in the first quarter were primarily driven by higher volatility, which positively affected trading revenues.

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E*TRADE Financial’s lower valuations

E*TRADE Financial (ETFC) is expected to report a rise in valuations moving forward. This trend is expected to result from the increasing penetration of discount brokerages among the market participants, compared to traditional brokerages. The execution of transactions through its digital tools also attract market participants. When the Federal Reserve hikes interest rates, the company’s interest income is expected to be positively impacted.

The price-to-earnings ratio of E*TRADE is ~23.3x on an LTM (last-12-months) basis. Among its peers (XLF), Charles Schwab, TD Ameritrade Holding, and Interactive Brokers Group have PE ratios of 32.6x, ~36.2x, and ~20.5x, respectively, on an LTM basis.


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