TD Ameritrade Or E*TRADE: Which Stock Is A Better Pick?
Zacks Investment Research | Dec 04, 2018 03:37AM ET
Benefits from an improving economy and higher interest rates have positioned the .
Though both investment brokers have similar business trends, an insight into the financials will help decide which investment option is better.
Price Performance
Both banks have outperformed the industry (down 15.8%) year to date, witnessing stellar growth. While shares of TD Ameritrade have rallied 7%, E*TRADE has risen 6.7%. So, TD Ameritrade has performed better than E*TRADE.
Year-To-Date Price Performance
Dividend Yield
Both the companies have been deploying capital in terms of dividend payments and share purchases to enhance shareholder value.
TD Ameritrade announced 43% dividend hike in October. Further, the company has a share buyback authorization in place. It has a dividend yield of 2.23%.
Dividend Yield: AMTD
Recently, E*TRADE initiated dividend payment. Further, the company has a share repurchase authorization in place. It has a dividend yield of 1.07%.
Dividend Yield: ETFC
As visible in the above charts, TD Ameritrade has an edge over E*TRADE. Not only is TD Ameritrade’s dividend yield better than E*TRADE but is also above the industry average of 0.89%.
Return on Equity (ROE)
ROE is a measure of a company’s efficiency in utilizing shareholders’ funds. TD Ameritrade’s ROE for the trailing 12-month period is 24.54% while that for E*TRADE is 15.45% compared with the industry’s level of 11.89%. Therefore, TD Ameritrade reinvests its earnings more efficiently.
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Earnings Estimate Revisions & Growth Projections
The Zacks Consensus Estimate for fiscal 2019 earnings of TD Ameritrade has moved up 1% over the past 30 days. Meanwhile, the same for E*TRADE has jumped 1.3% for this year during the same time frame.
Moreover, fiscal 2019 earnings for TD Ameritrade are projected to jump 18.9% year over year. For E*TRADE, the Zacks Consensus Estimate is pegged at $3.85 for 2018, reflecting a year-over-year increase of a massive 75.8%.
Hence, E*TRADE reflects better earnings growth prospects.
Sales Growth
Sales for TD Ameritrade for fiscal 2019 are projected to increase 8.1% year over year to $5.9 billion. For E*TRADE, the Zacks Consensus Estimate is pegged at $2.9 billion for 2018, indicating year-over-year growth of 22.1%.
Therefore, E*TRADE has an edge here as well.
Valuation
TD Ameritrade has a Zacks Investment Research
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