Credit: Shutterstock photoAfter a solid performance across most key metrics through October, E-Trade ( ETFC ) sustained its growth momentum in November. The brokerage saw a 19% year-over-year rise and 15% month-over-month rise in trading volumes during the month. The acquisition of OptionsHouse in mid-2016 continued to contribute to growth in brokerage accounts and derivative trading volumes, with over 31% of trading volumes attributed to derivatives. With around 20% revenue from trading commissions, strong growth in trading volumes should propel the brokerage's Q4 top-line growth.
Interest earning assets have also continued their strong growth throughout the year, in large part due to the rate hikes over recent months and the expectation of further interest rate hikes in the year ahead. The company generates over 60% of its revenue from interest earning assets. As E-Trade has a higher yield on its interest earning assets (2.7%) relative to most competitors, rate hikes should drive solid revenue growth for the company.
We have a price estimate for E-Trade's stock of about $43 , which is slightly below the market price.
See Our Complete Analysis For E-Trade Here
View Interactive Institutional Research (Powered by Trefis):
Global Large Cap | U.S. Mid & Small Cap | European Large & Mid Cap
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
