E*TRADE Financial (NASDAQ:ETFC) and Brookline Bancorp (NASDAQ:BRKL) Critical Analysis

E*TRADE Financial (NASDAQ:ETFC) and Brookline Bancorp (NASDAQ:BRKL) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their profitability, dividends, valuation, risk, institutional ownership, analyst recommendations and earnings.

Risk and Volatility

E*TRADE Financial has a beta of 1.25, meaning that its share price is 25% more volatile than the S&P 500. Comparatively, Brookline Bancorp has a beta of 0.75, meaning that its share price is 25% less volatile than the S&P 500.

Valuation and Earnings

This table compares E*TRADE Financial and Brookline Bancorp’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
E*TRADE Financial $2.89 billion 3.73 $955.00 million $4.03 12.09
Brookline Bancorp $377.42 million 2.07 $87.72 million $1.10 8.99

E*TRADE Financial has higher revenue and earnings than Brookline Bancorp. Brookline Bancorp is trading at a lower price-to-earnings ratio than E*TRADE Financial, indicating that it is currently the more affordable of the two stocks.

Dividends

E*TRADE Financial pays an annual dividend of $0.56 per share and has a dividend yield of 1.1%. Brookline Bancorp pays an annual dividend of $0.46 per share and has a dividend yield of 4.7%. E*TRADE Financial pays out 13.9% of its earnings in the form of a dividend. Brookline Bancorp pays out 41.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. E*TRADE Financial has increased its dividend for 1 consecutive years and Brookline Bancorp has increased its dividend for 2 consecutive years. Brookline Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current ratings and price targets for E*TRADE Financial and Brookline Bancorp, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
E*TRADE Financial 0 12 1 0 2.08
Brookline Bancorp 0 1 3 0 2.75

E*TRADE Financial presently has a consensus price target of $44.42, suggesting a potential downside of 8.84%. Brookline Bancorp has a consensus price target of $16.00, suggesting a potential upside of 61.78%. Given Brookline Bancorp’s stronger consensus rating and higher probable upside, analysts plainly believe Brookline Bancorp is more favorable than E*TRADE Financial.

Profitability

This table compares E*TRADE Financial and Brookline Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
E*TRADE Financial 29.81% 15.84% 1.49%
Brookline Bancorp 12.67% 5.15% 0.60%

Insider & Institutional Ownership

89.9% of E*TRADE Financial shares are held by institutional investors. Comparatively, 80.1% of Brookline Bancorp shares are held by institutional investors. 0.3% of E*TRADE Financial shares are held by company insiders. Comparatively, 2.6% of Brookline Bancorp shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

E*TRADE Financial beats Brookline Bancorp on 10 of the 17 factors compared between the two stocks.

E*TRADE Financial Company Profile

E*TRADE Financial Corporation, a financial services company, provides brokerage and related products and services for traders, investors, stock plan administrators and participants, and registered investment advisors (RIAs). It also offers investor-focused banking products, primarily sweep deposits to customers; clearing and settlement services; Federal Deposit Insurance Corporation insurance services; custody solutions to RIAs; other banking and cash management services; software and services for managing equity compensation plans to its corporate clients; retail futures transaction services; and investment advisory services. The company provides its services to customers through digital platforms; and a network of industry-licensed customer service representatives and financial consultants through phone, email, and online at two national financial centers, as well as in-person at 30 regional financial centers in the United States. E*TRADE Financial Corporation was founded in 1982 and is headquartered in New York, New York.

Brookline Bancorp Company Profile

Brookline Bancorp, Inc. operates as the holding company for Brookline Bank, Bank Rhode Island, First Ipswich Bank, and Brookline Securities Corp that provide commercial, business, and retail banking services to corporate, municipal, and retail customers in the United States. Its deposit products include non-interest-bearing demand checking accounts, NOW accounts, savings accounts, and money market accounts, as well as commercial, municipal, and retail deposits. The company's loan portfolio primarily comprises first mortgage loans secured by commercial, multi-family, and residential real estate properties; loans to business entities comprising commercial lines of credit; loans to condominium associations; financing for construction and development projects; home equity and other consumer loans; and commercial loans and leases to small and midsized businesses. It also provides term loans, letters of credit, cash management, investment advisory, and online and mobile banking services, as well as invests in debt and equity securities. As of December 31, 2018, the Company operated 51 full-service banking offices in greater Boston, the north shore of Massachusetts, and Rhode Island. Brookline Bancorp, Inc. was founded in 1871 and is headquartered in Boston, Massachusetts.

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