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E*TRADE is slated to release its Q4 and full-year 2019 results on January 23, 2020. For FY 2019, Trefis estimates that the company will report:Revenues would slightly decrease to $2.8 billion primarily
due to lower trading commissions and negative growth in principal transactions, fees & other revenues. Further, it would miss the consensus estimate of $2.9 billion.The EPS figure would improve to $3.93 due to a combination of lower expenses and a steady decrease in shares outstanding. Further, it would be higher than the consensus earnings estimate of $3.89.
We believe that weaker-than-expected revenues for FY 2019 would overshadow the earnings beat, resulting in a slight negative movement in the E*TRADE's stock price once earnings are announced. Our forecast indicates that E*TRADE's valuation is $43 a share, which is roughly 10% below its current price of $47.
(1) Revenues are expected to be slightly below consensus estimates
Trefis estimates E*TRADE's 2019 revenues to be $2.8 billion, 3% below the consensus estimate of $2.9 billion
Trefis Estimate of Total Revenues
(1) Net Interest on Assets $2.0 Bil (70%)
(2) Principal Transactions, Fees and Others
$0.5 Bil (17%)
(3) Trading Commissions $0.4 Bil (13%)
TOTAL $2.8 Bil
Consensus $2.9 Bil
Surprise -($0.08) Bil (*)
(*) - Numbers may not add up due to rounding
(2) EPS likely to narrowly beat consensus estimates
E*TRADE's 2019 earnings per share (EPS) expected to be $3.93 per Trefis analysis, 1% more than the consensus estimate of $3.89 per share
EPS - 2019E
Total Revenues $2.8 Bil
- Total Expenses $1.8 Bil (*)
Net Income $1.0 Bil
÷ Shares Outstanding 250 Mil
(*) - The expense figure includes preferred dividend and other minority expenses
(3) Stock price estimate ~10% lower than the market price
Trefis' forecast for E*TRADE's 2019 earnings is slightly higher than the market estimates, although P/E multiple is lagging. This works out to a fair value of $43 for E*TRADE's stock as opposed to the current market price around $47
E*TRADE's Share Price [= A x B]
EPS - 2019E [A]
Trailing P/E Multiple [B]
Details about our forecast for E*TRADE's (1) Revenues, (2) EPS, and (3) P/E Multiple follow:
What about Revenues in 2020?
See E*TRADE Revenue - How Does E*TRADE Make Money?
We provide an interactive, in-depth view of the company's revenues along with our forecasts and a comparison of trends with peers Charles Schwab and TD Ameritrade.
Key for 2020: We expect net revenues to shrink by 13% (about $367 million) in 2020, primarily due to the elimination of Trading Commissions.
E*TRADE Valuation: Expensive Or Cheap?TD Ameritrade Revenues: How Does Ameritrade Make Money?Charles Schwab Revenues: How Does Schwab Make Money?More Financial Companies Data
What about Expenses and Earnings in 2020?
Key for 2020: We believe that a lower revenue growth coupled with a slightly higher reduction in expenses will result in the net income margin figure rising to 35.3% in 2020.
(3) A trailing P/E multiple of 10.9x looks appropriate for E*TRADE's stock, as opposed to the current implied P/E multiple of 12.0x
We use our full cash flow model for E*TRADE to arrive at a P/E multiple of 10.9x for a price estimate of $43
Note: P/E Multiples are based on Share Price at the end of the year, and reported (or expected) Adjusted Earnings for the full year
P/E Multiple ETFC
P/E Multiple SCHW
P/E Multiple AMTD
1. How to save your forecasts for E*TRADE:
Click on the blue "Try Trefis" button in the header to create an account, then navigate back to this dashboard. Now, any changes you make to these inputs will be auto-saved as a scenario (see left panel of dashboard).
2. How to monitor your scenario vs. actual results
Once you've saved your forecast, you can "rename" your scenario by clicking on the gear icon next to the scenario (on the left panel). For more info, see this quick, 30-sec video (look at the 9 sec mark)
With your forecast saved and named, you can compare your forecasts to hundreds of other Trefis users who came up with their own forecasts. Lastly, you can share with friends and colleagues to show them how you fared and compare your forecasts to theirs.