Intrinsic value of E*TRADE Financial - ETFC

Previous Close

$49.64

  Intrinsic Value

$111.85

stock screener

  Rating & Target

str. buy

+125%

Previous close

$49.64

 
Intrinsic value

$111.85

 
Up/down potential

+125%

 
Rating

str. buy

Our model is not good at valuating stocks of financial companies, such as ETFC.

We calculate the intrinsic value of ETFC stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 13.6

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  41.68
  23.30
  21.47
  19.82
  18.34
  17.01
  15.81
  14.73
  13.75
  12.88
  12.09
  11.38
  10.74
  10.17
  9.65
  9.19
  8.77
  8.39
  8.05
  7.75
  7.47
  7.22
  7.00
  6.80
  6.62
  6.46
  6.31
  6.18
  6.06
  5.96
  5.86
Revenue, $m
  1,941
  2,393
  2,907
  3,483
  4,122
  4,823
  5,586
  6,408
  7,289
  8,228
  9,223
  10,273
  11,376
  12,533
  13,743
  15,005
  16,321
  17,690
  19,114
  20,595
  22,134
  23,733
  25,395
  27,123
  28,919
  30,787
  32,730
  34,754
  36,861
  39,058
  41,347
Variable operating expenses, $m
 
  2,180
  2,597
  3,065
  3,584
  4,153
  4,772
  5,440
  6,155
  6,917
  7,725
  8,340
  9,236
  10,175
  11,158
  12,183
  13,251
  14,363
  15,519
  16,721
  17,971
  19,269
  20,618
  22,021
  23,479
  24,996
  26,574
  28,217
  29,928
  31,711
  33,570
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  1,103
  2,180
  2,597
  3,065
  3,584
  4,153
  4,772
  5,440
  6,155
  6,917
  7,725
  8,340
  9,236
  10,175
  11,158
  12,183
  13,251
  14,363
  15,519
  16,721
  17,971
  19,269
  20,618
  22,021
  23,479
  24,996
  26,574
  28,217
  29,928
  31,711
  33,570
Operating income, $m
  838
  213
  310
  418
  538
  670
  814
  968
  1,134
  1,311
  1,498
  1,932
  2,140
  2,357
  2,585
  2,822
  3,070
  3,328
  3,595
  3,874
  4,163
  4,464
  4,777
  5,102
  5,440
  5,791
  6,157
  6,537
  6,934
  7,347
  7,777
EBITDA, $m
  1,077
  506
  615
  737
  872
  1,020
  1,181
  1,355
  1,541
  1,740
  1,950
  2,172
  2,406
  2,650
  2,906
  3,173
  3,451
  3,741
  4,042
  4,355
  4,681
  5,019
  5,370
  5,736
  6,115
  6,510
  6,921
  7,349
  7,795
  8,259
  8,744
Interest expense (income), $m
  77
  1,039
  1,342
  1,702
  2,107
  2,555
  3,047
  3,582
  4,159
  4,777
  5,436
  6,134
  6,870
  7,644
  8,456
  9,305
  10,190
  11,114
  12,074
  13,074
  14,113
  15,192
  16,314
  17,480
  18,692
  19,953
  21,263
  22,627
  24,047
  25,526
  27,066
Earnings before tax, $m
  838
  -825
  -1,032
  -1,284
  -1,568
  -1,885
  -2,233
  -2,613
  -3,025
  -3,466
  -3,938
  -4,201
  -4,730
  -5,287
  -5,871
  -6,482
  -7,121
  -7,786
  -8,479
  -9,200
  -9,949
  -10,728
  -11,538
  -12,379
  -13,253
  -14,162
  -15,107
  -16,090
  -17,113
  -18,179
  -19,289
Tax expense, $m
  286
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  552
  -825
  -1,032
  -1,284
  -1,568
  -1,885
  -2,233
  -2,613
  -3,025
  -3,466
  -3,938
  -4,201
  -4,730
  -5,287
  -5,871
  -6,482
  -7,121
  -7,786
  -8,479
  -9,200
  -9,949
  -10,728
  -11,538
  -12,379
  -13,253
  -14,162
  -15,107
  -16,090
  -17,113
  -18,179
  -19,289

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  3,410
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  48,999
  55,657
  67,607
  81,008
  95,866
  112,169
  129,899
  149,027
  169,522
  191,353
  214,487
  238,897
  264,561
  291,463
  319,594
  348,953
  379,549
  411,397
  444,522
  478,958
  514,746
  551,935
  590,584
  630,756
  672,524
  715,968
  761,172
  808,231
  857,243
  908,315
  961,560
Adjusted assets (=assets-cash), $m
  45,589
  55,657
  67,607
  81,008
  95,866
  112,169
  129,899
  149,027
  169,522
  191,353
  214,487
  238,897
  264,561
  291,463
  319,594
  348,953
  379,549
  411,397
  444,522
  478,958
  514,746
  551,935
  590,584
  630,756
  672,524
  715,968
  761,172
  808,231
  857,243
  908,315
  961,560
Revenue / Adjusted assets
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
Average production assets, $m
  485
  598
  727
  871
  1,031
  1,206
  1,396
  1,602
  1,822
  2,057
  2,306
  2,568
  2,844
  3,133
  3,436
  3,751
  4,080
  4,423
  4,779
  5,149
  5,534
  5,933
  6,349
  6,781
  7,230
  7,697
  8,183
  8,688
  9,215
  9,764
  10,337
Working capital, $m
  0
  1,197
  1,454
  1,742
  2,061
  2,412
  2,793
  3,204
  3,645
  4,114
  4,611
  5,136
  5,688
  6,266
  6,871
  7,502
  8,160
  8,845
  9,557
  10,298
  11,067
  11,867
  12,698
  13,561
  14,459
  15,393
  16,365
  17,377
  18,431
  19,529
  20,674
Total debt, $m
  33,085
  38,334
  48,635
  60,187
  72,994
  87,048
  102,331
  118,819
  136,486
  155,304
  175,245
  196,287
  218,410
  241,599
  265,848
  291,156
  317,529
  344,982
  373,536
  403,220
  434,069
  466,126
  499,441
  534,070
  570,074
  607,522
  646,488
  687,053
  729,301
  773,326
  819,223
Total liabilities, $m
  42,727
  47,976
  58,277
  69,829
  82,636
  96,690
  111,973
  128,461
  146,128
  164,946
  184,887
  205,929
  228,052
  251,241
  275,490
  300,798
  327,171
  354,624
  383,178
  412,862
  443,711
  475,768
  509,083
  543,712
  579,716
  617,164
  656,130
  696,695
  738,943
  782,968
  828,865
Total equity, $m
  6,272
  7,681
  9,330
  11,179
  13,229
  15,479
  17,926
  20,566
  23,394
  26,407
  29,599
  32,968
  36,509
  40,222
  44,104
  48,156
  52,378
  56,773
  61,344
  66,096
  71,035
  76,167
  81,501
  87,044
  92,808
  98,804
  105,042
  111,536
  118,300
  125,347
  132,695
Total liabilities and equity, $m
  48,999
  55,657
  67,607
  81,008
  95,865
  112,169
  129,899
  149,027
  169,522
  191,353
  214,486
  238,897
  264,561
  291,463
  319,594
  348,954
  379,549
  411,397
  444,522
  478,958
  514,746
  551,935
  590,584
  630,756
  672,524
  715,968
  761,172
  808,231
  857,243
  908,315
  961,560
Debt-to-equity ratio
  5.275
  4.990
  5.210
  5.380
  5.520
  5.620
  5.710
  5.780
  5.830
  5.880
  5.920
  5.950
  5.980
  6.010
  6.030
  6.050
  6.060
  6.080
  6.090
  6.100
  6.110
  6.120
  6.130
  6.140
  6.140
  6.150
  6.150
  6.160
  6.160
  6.170
  6.170
Adjusted equity ratio
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  552
  -825
  -1,032
  -1,284
  -1,568
  -1,885
  -2,233
  -2,613
  -3,025
  -3,466
  -3,938
  -4,201
  -4,730
  -5,287
  -5,871
  -6,482
  -7,121
  -7,786
  -8,479
  -9,200
  -9,949
  -10,728
  -11,538
  -12,379
  -13,253
  -14,162
  -15,107
  -16,090
  -17,113
  -18,179
  -19,289
Depreciation, amort., depletion, $m
  239
  293
  305
  318
  333
  350
  368
  387
  407
  429
  452
  240
  266
  293
  321
  351
  381
  413
  447
  481
  517
  555
  593
  634
  676
  719
  765
  812
  861
  913
  966
Funds from operations, $m
  2,350
  -533
  -727
  -966
  -1,235
  -1,535
  -1,866
  -2,226
  -2,617
  -3,037
  -3,485
  -3,961
  -4,464
  -4,994
  -5,550
  -6,132
  -6,739
  -7,373
  -8,032
  -8,719
  -9,432
  -10,174
  -10,944
  -11,745
  -12,577
  -13,442
  -14,342
  -15,278
  -16,252
  -17,266
  -18,323
Change in working capital, $m
  725
  226
  257
  288
  319
  351
  381
  411
  441
  469
  497
  525
  552
  578
  605
  631
  658
  685
  712
  740
  769
  800
  831
  864
  898
  934
  972
  1,012
  1,054
  1,098
  1,145
Cash from operations, $m
  1,625
  -759
  -984
  -1,254
  -1,554
  -1,885
  -2,247
  -2,638
  -3,058
  -3,506
  -3,983
  -4,486
  -5,016
  -5,572
  -6,155
  -6,763
  -7,397
  -8,057
  -8,744
  -9,459
  -10,202
  -10,973
  -11,775
  -12,609
  -13,475
  -14,376
  -15,314
  -16,290
  -17,306
  -18,364
  -19,468
Maintenance CAPEX, $m
  0
  -45
  -56
  -68
  -81
  -96
  -113
  -131
  -150
  -170
  -192
  -215
  -240
  -266
  -293
  -321
  -351
  -381
  -413
  -447
  -481
  -517
  -555
  -593
  -634
  -676
  -719
  -765
  -812
  -861
  -913
New CAPEX, $m
  -75
  -114
  -128
  -144
  -160
  -175
  -191
  -206
  -220
  -235
  -249
  -262
  -276
  -289
  -302
  -316
  -329
  -342
  -356
  -370
  -385
  -400
  -415
  -432
  -449
  -467
  -486
  -506
  -527
  -549
  -572
Cash from investing activities, $m
  -4,004
  -159
  -184
  -212
  -241
  -271
  -304
  -337
  -370
  -405
  -441
  -477
  -516
  -555
  -595
  -637
  -680
  -723
  -769
  -817
  -866
  -917
  -970
  -1,025
  -1,083
  -1,143
  -1,205
  -1,271
  -1,339
  -1,410
  -1,485
Free cash flow, $m
  -2,379
  -918
  -1,168
  -1,466
  -1,795
  -2,157
  -2,550
  -2,974
  -3,428
  -3,911
  -4,424
  -4,964
  -5,532
  -6,127
  -6,750
  -7,400
  -8,076
  -8,781
  -9,514
  -10,276
  -11,067
  -11,890
  -12,745
  -13,634
  -14,558
  -15,519
  -16,519
  -17,560
  -18,645
  -19,775
  -20,953
Issuance/(repayment) of debt, $m
  2,237
  8,659
  10,301
  11,552
  12,807
  14,054
  15,283
  16,488
  17,667
  18,818
  19,942
  21,042
  22,122
  23,189
  24,249
  25,308
  26,373
  27,453
  28,554
  29,684
  30,849
  32,057
  33,315
  34,629
  36,004
  37,448
  38,966
  40,564
  42,249
  44,024
  45,897
Issuance/(repurchase) of shares, $m
  -52
  2,234
  2,681
  3,133
  3,618
  4,134
  4,680
  5,253
  5,853
  6,479
  7,130
  7,570
  8,272
  8,999
  9,753
  10,534
  11,343
  12,181
  13,050
  13,952
  14,888
  15,860
  16,871
  17,922
  19,017
  20,157
  21,345
  22,584
  23,877
  25,227
  26,637
Cash from financing (excl. dividends), $m  
  2,096
  10,893
  12,982
  14,685
  16,425
  18,188
  19,963
  21,741
  23,520
  25,297
  27,072
  28,612
  30,394
  32,188
  34,002
  35,842
  37,716
  39,634
  41,604
  43,636
  45,737
  47,917
  50,186
  52,551
  55,021
  57,605
  60,311
  63,148
  66,126
  69,251
  72,534
Total cash flow (excl. dividends), $m
  -283
  9,976
  11,813
  13,220
  14,630
  16,031
  17,412
  18,767
  20,092
  21,385
  22,648
  23,648
  24,862
  26,061
  27,252
  28,442
  29,640
  30,853
  32,090
  33,360
  34,670
  36,028
  37,441
  38,917
  40,463
  42,086
  43,792
  45,588
  47,481
  49,476
  51,581
Retained Cash Flow (-), $m
  -473
  -2,234
  -2,681
  -3,133
  -3,618
  -4,134
  -4,680
  -5,253
  -5,853
  -6,479
  -7,130
  -7,570
  -8,272
  -8,999
  -9,753
  -10,534
  -11,343
  -12,181
  -13,050
  -13,952
  -14,888
  -15,860
  -16,871
  -17,922
  -19,017
  -20,157
  -21,345
  -22,584
  -23,877
  -25,227
  -26,637
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  7,742
  9,132
  10,086
  11,012
  11,897
  12,733
  13,515
  14,239
  14,906
  15,518
  16,078
  16,590
  17,062
  17,499
  17,908
  18,297
  18,672
  19,040
  19,408
  19,782
  20,167
  20,570
  20,995
  21,446
  21,929
  22,447
  23,004
  23,604
  24,250
  24,945
Discount rate, %
 
  12.30
  12.92
  13.56
  14.24
  14.95
  15.70
  16.48
  17.31
  18.17
  19.08
  20.04
  21.04
  22.09
  23.19
  24.35
  25.57
  26.85
  28.19
  29.60
  31.08
  32.64
  34.27
  35.98
  37.78
  39.67
  41.65
  43.73
  45.92
  48.22
  50.63
PV of cash for distribution, $m
 
  6,894
  7,163
  6,887
  6,466
  5,927
  5,308
  4,645
  3,971
  3,317
  2,706
  2,157
  1,678
  1,274
  944
  681
  479
  328
  218
  141
  88
  54
  31
  18
  10
  5
  3
  1
  1
  0
  0
Current shareholders' claim on cash, %
  100
  85.9
  74.0
  64.1
  55.8
  48.8
  42.9
  37.8
  33.4
  29.6
  26.4
  23.6
  21.1
  19.0
  17.1
  15.4
  13.9
  12.5
  11.3
  10.3
  9.3
  8.4
  7.7
  7.0
  6.3
  5.7
  5.2
  4.8
  4.3
  3.9
  3.6

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.

FINANCIAL RATIOS  of  E*TRADE Financial (ETFC)

Valuation Ratios
P/E Ratio 24.6
Price to Sales 7
Price to Book 2.2
Price to Tangible Book
Price to Cash Flow 8.4
Price to Free Cash Flow 8.8
Growth Rates
Sales Growth Rate 41.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 7.1%
Cap. Spend. - 3 Yr. Gr. Rate 9.8%
Financial Strength
Quick Ratio 0
Current Ratio NaN
LT Debt to Equity 22.4%
Total Debt to Equity 527.5%
Interest Coverage 12
Management Effectiveness
Return On Assets 1.3%
Ret/ On Assets - 3 Yr. Avg. 1.4%
Return On Total Capital 1.5%
Ret/ On T. Cap. - 3 Yr. Avg. 1%
Return On Equity 9.1%
Return On Equity - 3 Yr. Avg. 6.6%
Asset Turnover 0
Profitability Ratios
Gross Margin 94.6%
Gross Margin - 3 Yr. Avg. 94%
EBITDA Margin 59.5%
EBITDA Margin - 3 Yr. Avg. 56.6%
Operating Margin 43.2%
Oper. Margin - 3 Yr. Avg. 25.4%
Pre-Tax Margin 43.2%
Pre-Tax Margin - 3 Yr. Avg. 25.4%
Net Profit Margin 28.4%
Net Profit Margin - 3 Yr. Avg. 21.7%
Effective Tax Rate 34.1%
Eff/ Tax Rate - 3 Yr. Avg. -41.7%
Payout Ratio 0%

ETFC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ETFC stock intrinsic value calculation we used $1941 million for the last fiscal year's total revenue generated by E*TRADE Financial. The default revenue input number comes from 2016 income statement of E*TRADE Financial. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our ETFC stock valuation model: a) initial revenue growth rate of 23.3% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 12.3%, whose default value for ETFC is calculated based on our internal credit rating of E*TRADE Financial, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of E*TRADE Financial.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of ETFC stock the variable cost ratio is equal to 93.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for ETFC stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for E*TRADE Financial.

Corporate tax rate of 27% is the nominal tax rate for E*TRADE Financial. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the ETFC stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for ETFC are equal to 25%.

Life of production assets of 10.7 years is the average useful life of capital assets used in E*TRADE Financial operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for ETFC is equal to 50%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $6272 million for E*TRADE Financial - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 274.769 million for E*TRADE Financial is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of E*TRADE Financial at the current share price and the inputted number of shares is $13.6 billion.

RELATED COMPANIES Price Int.Val. Rating
SCHW Charles Schwab 50.72 83.88  str.buy
AMTD TD Ameritrade 52.08 110.45  str.buy
GCAP GAIN Capital H 7.28 14.10  str.buy
IBKR Interactive Br 60.67 95.15  str.buy
NHLD National Holdi 2.49 2.31  hold
RJF Raymond James 89.04 484.28  str.buy
LTS Ladenburg Thal 3.12 0.96  str.sell
LPLA LPL Financial 55.02 35.40  sell

COMPANY NEWS

▶ E*TRADE to Host Interactive Options Forum   [Dec-06-17 08:05AM  Business Wire]
▶ "Fast Money" final trades: ETFC, NKE and more   [Nov-29-17 05:59PM  CNBC Videos]
▶ E*TRADE Announces Pricing of Preferred Stock Offering   [Nov-27-17 05:10PM  Business Wire]
▶ These Amazon Rivals Lead Four Hot Stocks Near Buy Points   [09:48AM  Investor's Business Daily]
▶ E*TRADE to Host Education Day in Santa Clara   [08:05AM  Business Wire]
▶ E*TRADE's New Ad Tells Investors: Don't Get Mad, Get Even   [Nov-24-17 11:24AM  Investopedia]
▶ TD Ameritrade Short Interest Down in October   [Nov-17-17 02:05PM  Investopedia]
▶ Should You Buy E*TRADE Financial Corporation (ETFC)?   [Nov-16-17 03:37PM  Simply Wall St.]
▶ E*TRADE's Increase in DARTs Is a Good Sign: Zacks   [Nov-15-17 01:05PM  Investopedia]
▶ E*TRADE to Host Education Day in Houston   [Nov-06-17 08:05AM  Business Wire]
▶ China Calls for Protections for Online Trading Platforms   [Oct-31-17 01:51PM  Investopedia]
▶ White House downplays Russia investigation   [08:50AM  Yahoo Finance]
▶ E*Trade Stock Approaches Key Support Levels   [Oct-30-17 12:20PM  Investopedia]
▶ RIAs Like E*Trade's Trust Company of America Deal   [Oct-26-17 02:25PM  Investopedia]
▶ E-Trade Downgraded by IHS Markit Thanks to Outflows   [Oct-25-17 12:37PM  Investopedia]
▶ These 3 Online Brokers Are Buys; TD Ameritrade Growth Accelerates   [Oct-24-17 04:03PM  Investor's Business Daily]
▶ E-Trade tops Street 3Q forecasts   [Oct-19-17 04:15PM  Associated Press]
▶ How Wall Street Analysts View E*TRADE   [Oct-17-17 10:37AM  Market Realist]
▶ What Do E*TRADEs Premium Valuations Suggest?   [09:08AM  Market Realist]
▶ Behind E*TRADEs Assets and Liabilities   [08:06AM  Market Realist]
▶ Charles Schwab Q3 Revenue Misses Forecasts; Stock Stays In Buy Zone   [Oct-16-17 04:05PM  Investor's Business Daily]
▶ Understanding E*TRADEs Non-Interest Expenses   [10:40AM  Market Realist]
▶ Behind E*TRADEs Fees and Service Charges   [09:10AM  Market Realist]
▶ E*TRADEs Net Revenues Rose in 1H17Heres Why   [07:43AM  Market Realist]
▶ E*TRADE to Host Education Day in Chicago   [Oct-13-17 08:05AM  Business Wire]
▶ E*Trade Financial At Upper End Of Buy Zone With Earnings Due   [Oct-10-17 03:00AM  Investor's Business Daily]
▶ Bank Of America Breaks Down The Brokerage Sector   [Oct-09-17 04:11PM  Benzinga]
▶ E*TRADE to Host Education Day in New York City   [Oct-04-17 04:05PM  Business Wire]
▶ Brokerage Stocks Near Buy Points; Micron Due: Investing Action Plan   [Sep-25-17 04:24PM  Investor's Business Daily]
▶ Understanding TD Ameritrades Valuations   [07:38AM  Market Realist]
▶ A Look at E*TRADEs Valuations in 2Q17   [Sep-13-17 10:37AM  Market Realist]
Financial statements of ETFC
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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