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Dueling PE Ratios: Basket Case E*Trade vs. Most Popular Stock on the Planet – Go Figure

E*Trade (ETFC) is a business disaster, a summary of much of what’s gone wrong in the financial system. Best known as an online broker, E*Trade made some big, bad mortgage bets and almost went under in 2007. Chicago billionaire Ken Griffin stepped in, and his hedge fund Citadel (through an affiliate) made a $2.5 billion cash infusion, but four years later Griffin seemed to regret it. He sent a letter to the E*Trade board in which he said it had “squandered” the franchise and pushed for a sale of the company. Instead the board added two new board members, made former president and chief of TD Waterhouse Frank Petrilli chairman, and let the stock keep sliding downhill:

ETFC Chart

ETFC data by YCharts

After net revenues slid again last quarter –- down 13% from $517.6 million to $452.4 million, the board acted. The company abruptly ousted its CEO, Steven Freiberg, and a Wall Street Journal report, quoting JMP Securities analyst David Trone, indicated “the board could be warming up to the idea of a sale.”

Interesting, as who would buy it? TD Ameritrade (AMTD)? Charles Schwab (SCHW)? Capital One (COF)? E*Trade is currently selling for 14.52 times earnings. It has roughly the same PE as another company that seems to be in a vastly better position: ETFC PE Ratio Chart

ETFC PE Ratio data by YCharts

So if you’re an investor, you get a choice. Buy a troubled broker or Apple (AAPL), the most successful tech company on the planet.

From the editors of YCharts.YCharts Pro Investor Service includes professional stock charts, stock ratings and portfolio strategies.

Read more articles about: Company News  

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