NEW YORK (TheStreet) -- Shares of E-Trade Financial Services (ETFC) - Get Report were edging up on heavy trading volume late Thursday afternoon following reports that online brokerage Scottrade Financial Services could be looking for a buyer, Bloomberg reports, citing sources.
Scottrade is working with an adviser to explore its options. The company could be valued at $4 billion, sources noted.
Sandler O'Neil said following the report that potential buyers include online financial services company E-Trade as well as TD Ameritrade (AMTD) and Charles Schwab (SCHW), according to Barron's.
"Mergers and acquisitions work in the e-broker space and a deal for Scottrade would likely be accretive for any of the traditional (publicly traded) e-brokers," the firm noted.
Scottrade is the second largest private e-broker in the U.S. in terms of client assets behind Fidelity, according to Sandler O'Neil.
"We assume Scottrade's bank assets would produce revenue synergies for E-Trade Financial, which currently has greater average yields on securities of approximately 160 basis point," the firm added, Barron's reports.
If New York-based E-Trade were to buy the company, Sandler O'Neil estimates an earnings accretion level of approximately 14%.
More than 3.73 million shares of E-Trade have traded hands so far on Thursday vs. the 30-day average volume of about 3.29 million shares.
Separately, TheStreet Ratings objectively rated E-Trade stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
TheStreet Ratings rated this stock as a "buy" with a ratings score of B+.
The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and increase in stock price during the past year. We feel its strengths outweigh the fact that the company has had sub par growth in net income.
You can view the full analysis from the report here: ETFC