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Bull of the Day: E*Trade Financial (ETFC)


Like many stocks in the financial world, those in the brokerage industry have been on the upswing in recent sessions. While many forget about this area as a winner from growing prospects for a rate hike, the space is actually one of the biggest beneficiaries in such an environment.

That is because companies in this segment invest the float—which is client dollars that have yet to be invested in this example—in interest bearing securities. And when these securities are paying out higher rates, it is all that much better for companies in this space, which is part of the reason why the broker space is currently in the top half of the Zacks Industry Rank right now.

But if you are looking for a top choice in this market, you may want to give E*Trade Financial (ETFC) a closer inspection. The company may be one of the best positioned to take advantage of recent trends, and continue its recent run of strength too.


Analysts covering E*Trade stock have been pretty optimistic about the company’s fortunes in recent weeks. In fact, we haven’t seen a single new estimate go lower on the earnings front for either the current quarter or the current year over the past two months. Instead, we have seen seven estimates go higher for both of the aforementioned time frames, suggesting that analysts are in agreement about the company’s near-term prospects.

We have also seen a decent move higher in the consensus estimate for ETFC stock as a result of these analyst estimates, and the company is now projected to see decent EPS growth this year, and double-digit growth in the following year on the earnings front. If that wasn’t enough, the company also has seen the most recent estimates go ahead of the consensus, so the trend is definitely on E*Trade’s side right now.

The company also has a great history in earnings season, which includes an average beat of expectations of over 20% in the past four quarters. ETFC has actually only missed estimates once in the past three years, so it is easy to see why E*Trade is a Zacks Rank #1 (Strong Buy) stock right now.

Bottom Line

Rising rates look to benefit a number of companies across the financial space, but many focus in on banks for exposure. Instead, you might want to look to a company like E*Trade which has solid fundamentals and a good outlook for the rest of the year.

Beyond that, the company also has a very impressive history when it comes to beating earnings estimates, and it sees strong momentum right now too. In fact, shares of ETFC currently have a momentum grade of ‘A’ so there are plenty of reasons to like this stock ahead of the heart of earnings season, and beyond, for a portfolio.

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