Back to top

Image: Bigstock

E*TRADE's (ETFC) Ratings Upgraded by Moody's, Outlook Stable

Read MoreHide Full Article

E*TRADE Financial and E*TRADE Bank’s ratings have been upgraded by Moody's Investors Service, the rating arm of Moody's Corporation (MCO - Free Report) , concluding the review for upgrade, initiated in January 2018. However, the rating firm’s outlook for the bank has been affirmed at “stable”.

The investment bank’s senior unsecured rating has been upgraded to Baa2. E*TRADE Bank’s long-term ratings has been upgraded to A2 and short-term deposit rating upped to Prime-1.

Rationale Behind Upgrade

Per Moody’s, E*TRADE is well poised to benefit from the increasing interest-rate environment and client brokerage assets. Also, the company’s effort to expand its balance sheet is encouraging. Further, E*TRADE’s strong credit position displays its hold on strategies for overall growth. Additionally, the bank has maintained a solid positive operating leverage dealing with increasing client base, per Moody’s.

Moody’s is of the opinion that E*TRADE’s effort toward conservative use of leverage in acquisitions and shareholder-distribution policies is a key positive. In addition, it expects E*TRADE to maintain this approach while undertaking inorganic growth strategies in the future.

Conclusion

It is anticipated that E*TRADE will adopt a credit-centric approach to diversify its cash generating capabilities through new and profitable revenue streams in the near term, as such effort is likely to win another rating upgrade from Moody’s. Shares of E*TRADE have gained 24.3% over the past six months, outperforming 9.2% growth recorded by the industry.


 

Currently, the stock carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Stocks to Consider

TD Ameritrade (AMTD - Free Report) has been witnessing upward estimate revisions for the last 60 days. Additionally, the stock has gained nearly 18.4%, over the last six months. It currently carries a Zacks Rank of 2.

M&T Bank (MTB - Free Report) has been witnessing upward estimate revisions for the last 60 days. Also, the stock has gained nearly 12.7%, over the last six months. It currently holds a Zacks Rank of 2.

Zacks Editor-in-Chief Goes "All In" on This Stock

Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.

Download it free >>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Moody's Corporation (MCO) - free report >>

M&T Bank Corporation (MTB) - free report >>

Published in