Has E*TRADE Been Outplayed Again?

With shares of E*TRADE FINANCIAL CORPORATION (NASDAQ:ETFC) trading at around $9.55, is ETFC an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

E*TRADE has had its share of missteps in the past. It’s possible that those missteps have led the company to being gun shy. We don’t see much innovation out of E*TRADE anymore. Based on past results, that might be a positive. However, if the company continues to rely on the current business model without innovating, then it will continue to underperform TD Ameritrade Holding Corporation (NASDAQ:AMTD).

TD Ameritrade has launched its own investor sentiment index, which will be called the Investor Movement Index, or IMX. It will measure the risk appetite of investors and traders who have at least $2,000 in their account and trade at least once per month. The index will also read the most and least popular stocks. The IMX will be published monthly. TD Ameritrade is hoping that the IMX will become more important than consumer sentiment because it’s based on actual trades. This isn’t going to hurt E*TRADE at the present time, but it’s a sign that TD Ameritrade will continuously look for ways to grow. If E*TRADE continues to sit still, then it will be left in the dust.

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On the positive side, E*TRADE has been attracting and retaining customers who actively trade and invest. E*TRADE is also taking a focused approach at improving the balance sheet.

Let’s take a look at some important numbers for E*TRADE and see if it’s a good time to pounce.