E*TRADE Financial Corporation (NASDAQ: ETFC) and The Charles Schwab Corporation (NYSE:SCHW) are both large-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, risk, valuation, dividends, earnings, profitability and institutional ownership.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for E*TRADE Financial Corporation and The Charles Schwab Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
E*TRADE Financial Corporation 0 5 11 0 2.69
The Charles Schwab Corporation 0 6 10 0 2.63

E*TRADE Financial Corporation presently has a consensus price target of $43.29, suggesting a potential downside of 2.47%. The Charles Schwab Corporation has a consensus price target of $45.27, suggesting a potential upside of 1.81%. Given The Charles Schwab Corporation’s higher possible upside, analysts clearly believe The Charles Schwab Corporation is more favorable than E*TRADE Financial Corporation.

Earnings and Valuation

This table compares E*TRADE Financial Corporation and The Charles Schwab Corporation’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
E*TRADE Financial Corporation $2.32 billion 5.27 $592.13 million $2.15 20.64
The Charles Schwab Corporation $8.08 billion 7.37 $2.00 billion $1.49 29.84

The Charles Schwab Corporation has higher revenue and earnings than E*TRADE Financial Corporation. E*TRADE Financial Corporation is trading at a lower price-to-earnings ratio than The Charles Schwab Corporation, indicating that it is currently the more affordable of the two stocks.

Dividends

The Charles Schwab Corporation pays an annual dividend of $0.32 per share and has a dividend yield of 0.7%. E*TRADE Financial Corporation does not pay a dividend. The Charles Schwab Corporation pays out 21.5% of its earnings in the form of a dividend.

Volatility and Risk

E*TRADE Financial Corporation has a beta of 1.47, suggesting that its share price is 47% more volatile than the S&P 500. Comparatively, The Charles Schwab Corporation has a beta of 1.68, suggesting that its share price is 68% more volatile than the S&P 500.

Institutional & Insider Ownership

92.6% of E*TRADE Financial Corporation shares are owned by institutional investors. Comparatively, 79.5% of The Charles Schwab Corporation shares are owned by institutional investors. 0.2% of E*TRADE Financial Corporation shares are owned by insiders. Comparatively, 12.0% of The Charles Schwab Corporation shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares E*TRADE Financial Corporation and The Charles Schwab Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
E*TRADE Financial Corporation 28.42% 9.06% 1.03%
The Charles Schwab Corporation 26.73% 15.41% 0.98%

Summary

The Charles Schwab Corporation beats E*TRADE Financial Corporation on 9 of the 16 factors compared between the two stocks.

About E*TRADE Financial Corporation

E*Trade Financial Corporation is a financial services company. The Company provides online brokerage and related products and services primarily to individual retail investors under the brand E*TRADE Financial. The Company also provides investor-focused banking products, primarily sweep deposits, to retail investors. It provides its services to customers through its digital platforms and network of industry-licensed customer service representatives and Financial Consultants, over the phone and by e-mail. The Company’s brokerage business is organized into three product areas: Trading, Investing, and Corporate Services. The Company’s Trading products deliver automated trade order placement and execution services. The Company’s Investing products help investors build wealth and address their long-term investing needs. The Company’s Corporate Services channel provides stock plan administration services for both public and private companies.

About The Charles Schwab Corporation

The Charles Schwab Corporation (CSC) is a savings and loan holding company. The Company, through its subsidiaries, engages in wealth management, securities brokerage, banking, money management and financial advisory services. The Company provides financial services to individuals and institutional clients through two segments: Investor Services and Advisor Services. The Investor Services segment provides retail brokerage and banking services, retirement plan services and other corporate brokerage services. The Advisor Services segment provides custodial, trading, and support services as well as retirement business services. The Company offers a range of products to address individuals’ varying investment and financial needs. Its product offerings include brokerage, mutual funds, ETFs, advice solutions, banking and trust. Brokerage provides a range of brokerage accounts with cash management capabilities. Mutual funds offer third-party mutual funds through the Mutual Fund Marketplace.

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