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Non-Tech : E*Trade (NYSE:ET)

ET 16.64

+0.3%

Nov 13 3:59 PM EST

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To: larry who wrote (2534)	3/13/1998 5:00:00 PM
From: Oeconomicus	Read Replies (3) of 13953

Larry, we don't even know yet what Barron's has to say and I don't think that had anything to do with the decline. The article, BTW, is a comparison/ranking of brokerage services, not an investment opinion piece. Anyway, you should be careful using PE-to-growth to value stocks in isolation. It is best used only as a relative valuation measure. Relative to what is the question - other online service businesses or other stock brokers? Remember that brokers have capital requirements, so their capital constrains their growth at some point. Also, a big chunk of their income comes from what they earn on that capital directly (as opposed to transaction revenue). IMO, the best peer group to use would include discount brokers (both purely online and traditional) and retail oriented full service brokers with limited investment banking and trading (market making and proprietary trading) revenues. Again, don't be Fooled by the PEG ratio. PEs depend on much more than growth rates and growth rates are hard to predict anyway in such a competitive business. Good luck, Bob

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