E*Trade’s (ETFC) Hidden Value

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Because of its exposure to mortgage-related securities, shares in E*Trade (NASDAQ: ETFC) have fallen from a 52-week high of $25.79 to $3.63. Over the last six months, shares of rivals Schwab (NASDAQ: SCHW) and TDAmeritrade (NASDAQ:AMTD) are relatively flat.

The value of the discount brokerage arm of E*Trade may be more greater than many investors think.

In the most recent Barron’s survey of the best online brokers, E*Trade received a better total score that either Schwab or TDAmeritrade and did substantially better than those companies in the categories of "range of offerings", "trading technology", and "costs". Those things are worth a great deal to retail customers. They are great leverage for the eventually value of the firm if one of its rivals wants to make an offer.

Douglas A. McIntyre