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Should Value Investors Buy E-Trade (ETFC) Stock?

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company to watch right now is E-Trade (ETFC). ETFC is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A.

Investors should also recognize that ETFC has a P/B ratio of 1.82. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 1.94. Over the past year, ETFC's P/B has been as high as 2.82 and as low as 1.82, with a median of 2.35.

Finally, our model also underscores that ETFC has a P/CF ratio of 9.68. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. ETFC's P/CF compares to its industry's average P/CF of 16.67. Over the past 52 weeks, ETFC's P/CF has been as high as 17.99 and as low as 9.68, with a median of 15.61.

These figures are just a handful of the metrics value investors tend to look at, but they help show that E-Trade is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, ETFC feels like a great value stock at the moment.

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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.

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