E*TRADE Financial (NASDAQ: ETFC) and Jefferies Group (NYSE:JEF) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their profitability, institutional ownership, valuation, dividends, risk, analyst recommendations and earnings.

Earnings and Valuation

This table compares E*TRADE Financial and Jefferies Group’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
E*TRADE Financial $1.94 billion 6.85 $552.00 million $2.13 23.31
Jefferies Group N/A N/A N/A $1.09 N/A

E*TRADE Financial has higher revenue and earnings than Jefferies Group. Jefferies Group 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.

Analyst Recommendations

This is a summary of current ratings and recommmendations for E*TRADE Financial and Jefferies Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
E*TRADE Financial 0 4 11 0 2.73
Jefferies Group 0 0 0 0 N/A

E*TRADE Financial presently has a consensus target price of $47.54, suggesting a potential downside of 4.23%.

Insider and Institutional Ownership

94.3% of E*TRADE Financial shares are owned by institutional investors. 0.2% of E*TRADE Financial shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
E*TRADE Financial 27.35% 9.34% 1.02%
Jefferies Group N/A N/A N/A

Summary

E*TRADE Financial beats Jefferies Group on 8 of the 8 factors compared between the two stocks.

About E*TRADE Financial

E*Trade Financial Corporation is a financial services company. The Company provides online brokerage and related products and services primarily to individual retail investors under the brand E*TRADE Financial. The Company also provides investor-focused banking products, primarily sweep deposits, to retail investors. It provides its services to customers through its digital platforms and network of industry-licensed customer service representatives and Financial Consultants, over the phone and by e-mail. The Company’s brokerage business is organized into three product areas: Trading, Investing, and Corporate Services. The Company’s Trading products deliver automated trade order placement and execution services. The Company’s Investing products help investors build wealth and address their long-term investing needs. The Company’s Corporate Services channel provides stock plan administration services for both public and private companies.

About Jefferies Group

Jefferies Group LLC and its subsidiaries operate as a securities and investment banking firm. The Company operates in two business segments: Capital Markets segment consists of the Company’s securities and commodities trading activities and its investment banking activities, and Asset Management segment includes asset management activities and related services. On July 1, 2011, the Company acquired the Bache Global Commodities Group from Prudential Financial, Inc., and as of November 30, 2011, the Company operated a futures commission merchant through Jefferies Bache, LLC in the United States and a global commodities and financial derivatives broker through Jefferies Bache Limited in the United Kingdom. Effective March 1, 2013, Leucadia National Corp (Leucadia) acquired the remaining 71.4% interest in Jefferies Group Inc . Effective March 1, 2013, Leucadia National Corp (Leucadia) acquired the remaining 71.4% interest in Jefferies Group Inc.

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