In the new commercials, Spacey will star as an E-Trade scout looking for "Type E" people who know how to use the site and can name different product offerings that set it apart from rivals. Those online brokerage rivals include Charles Schwab (SCHW), Fidelity, Scottrade, Tradeking and TD Ameritrade.
In fiscal 2013, E-Trade posted revenue of $1.7 billion. The company added 95,000 new brokerage accounts and passed the three million mark. The company also added $10.4 billion in new assets, to take its total assets over 261 billion.
E-Trade has a market capitalization of $5.8 billion and posted revenue of $1.72 billion in fiscal 2013. Schwab had revenue of $5.4 billion in 2013 and trades with a market capitalization of $32.7 billion. TD Ameritrade has a $16.6 billion market capitalization and saw 2013 revenue of $2.8 billion. Of course, there are other variables like earnings per share and amount of assets, but on a strict price to sales ratio, E-Trade shares look undervalued.
E-Trade shares have a trailing price to sales of 3.3, compared to TD Ameritrade and Charles Schwab with 5.9 and 6.1, respectively. Even to get to a price to sales of 5.0x, E-Trade shares would rise 48%. The company continues to add accounts and assets.
The new focus on product offerings and not just simplicity could cause a plethora of account inflows that could help revenue and profits. E-Trade shares are up around 50% since a June 2010 1:10 split that really helped put the company on the right track.
At the time of publication the author had no position in any of the stocks mentioned.
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