​Why Surging E*Trade Financial Is a Brokerage Breakout

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E*Trade Financial (ETFC) provides online brokerage and related products and services primarily to individual retail investors. It also provides investor-focused banking products, primarily sweep deposits, to retail investors, notes Leo Fasciocco, editor of Ticker Tape Digest.

E*Trade is a leader in the strong brokerage sector. The company came in with first quarter net of 88 cents a share. That topped the Street consensus estimate of 79 cents a share. The stock responded bullishly off the news.

The stock has since been trending steadily high having made an eightfold move. It has now made a 10-year high. That is bullish.

This year, analysts are forecasting a 53% surge in net to $3.36 a share from the $2.19 the year before. Analysts have recently lifted their estimates.

The stock sells with a price-earnings ratio of 17. We see that as attractive for value-growth investors.

Looking out to 2019, the Street is currently forecasting a modest 13% increase in net to $3.79 a share from the anticipated $3.36 this year.

Net for the next two quarters will be very strong. For the second quarter, the Street is expecting a 62% jump in net to 84 cents a share from the 52 cents the year before. The highest estimate on the Street is at 87 cents a share.

We see good chances for an upside earnings surprise. The company topped the consensus estimate the past four quarters by 9 cents a share, 2 cents, 4 cents and 4 cents. Net for the third quarter is expected to leap 45% to 80 cents a share from 45 cents the year before.

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The daily chart shows the stock climbing from $44 in November to a peak near $58 by March. The stock pulled back and formed a cup-and-handle base.

The stock has since risen through a breakpoint zone with a good expansion in volume. We are now targeting it for a move to $75. A protective stop can be placed near $57.

Leo Fasciocco is editor and publisher of Ticker Tape Digest.

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Companies

Symbol Name Price Change % Volume
ETFC E*TRADE Financial Corporation 49.08 0.16 0.33 7,192,004 Trade

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