Jefferies Group (NYSE: JEF) and E*TRADE Financial (NASDAQ:ETFC) are both investment banking & brokerage services – nec companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, profitability, dividends and earnings.

Valuation & Earnings

This table compares Jefferies Group and E*TRADE Financial’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Jefferies Group N/A N/A N/A $1.09 N/A
E*TRADE Financial $1.94 billion 6.87 $552.00 million $2.13 23.37

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.

Profitability

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

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

Institutional and Insider Ownership

94.1% of E*TRADE Financial shares are held by institutional investors. 0.2% of E*TRADE Financial shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Analyst Recommendations

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

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

E*TRADE Financial has a consensus target price of $47.77, suggesting a potential downside of 4.04%.

Summary

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

Jefferies Group Company Profile

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.

E*TRADE Financial Company Profile

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.

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