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Category: Stock Market and Morgan Stanley
Date: 21 January 2021 Stock Price of Morgan Stanley (MS): $74.84 We take a look at the 4th quarter earnings report of their 2020 fiscal year of Morgan Stanley, a diversified financial services provider. The group reported revenues of $13.6 billion and net income of $3.26 billion for the 4th quarter of their 2020 fiscal year.
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- James P. Gorman, Chairman and Chief Executive Officer - The Firm produced a very strong quarter and record full-year results, with excellent performance across all three businesses and geographies. I am extremely proud of how our employees came together to support each other and our communities and deliver for our clients in an incredibly challenging year"
About Morgan Stanley
Morgan Stanley is a leading global financial services firm providing a wide range of investment banking, securities, wealth management and investment management services. With offices in more than 41 countries, the Firm’s employees serve clients worldwide including corporations, governments, institutions and individuals
Overview of Morgan Stanley's 4th quarter 2020 earnings report
Data below refers to the latest quarters data unless specified otherwise:
- Total revenue: $13.64 billion (up from $10.9billion for the same period of the previous year)
- Total revenue increased by 26% over the last 12 months
- Total noninterest expenses: $9.2 billion (up from $8.12 billion for the same period of the previous year)
- Total noninterest expenses increased by 13% over the last 12 months
- Net income: $3.26 billion (up 57% from $2.085 billion for the same period of the previous year)
- Diluted earnings per share: $1.81 (up 63% from $1.30 for the same period of the previous year)
- PE ratio of Morgan Stanley: 11.6
- Dividend yield of Morgan Stanley: 1.87%
- Diluted weighted-average shares outstanding: 1.802 billion (up from 1.602 billion for the same period of the previous year)
- Book value per share: $51.13 (up from $45.82 for the same period of the previous year)
- Goodwill: $16.6 billion
- Goodwill makes up 1.5% of Morgan Stanley's total assets
- Goodwill per stock: $9.21
- Stockholders equity in Morgan Stanley: $75.9 billion
- Stockholders equity per share: $42.11
- So Morgan Stanley is trading a 0.98 times its stockholders equity which is well outside the expected range of between 2 and 5 which most firms tend to trade at.
- For some perspective firms in the Dow Jones is trading at Price to Book value of 4.5
Morgan Stanley's management commentary on their 4th quarter 2020 earnings report
NEW YORK, January 20, 2021 – Morgan Stanley (NYSE: MS) today reported net revenues of $13.6 billion for the fourth quarter ended December 31, 2020 compared with $10.9 billion a year ago. Net income applicable to Morgan Stanley was $3.4 billion, or $1.81 per diluted share,1 compared with $2.2 billion, or $1.30 per diluted share,1 for the same period a year ago. The comparisons of current year results to prior periods were impacted by the acquisition of E*TRADE Financial Corporation (“E*TRADE”), completed on October 2, 2020, reported in the Wealth Management segment.
Full year net revenues were a record $48.2 billion compared with $41.4 billion a year ago. Net income applicable to Morgan Stanley for the current year was $11.0 billion, or $6.46 per diluted share,1 compared with $9.0 billion, or $5.19 per diluted share, a year ago.
James P. Gorman, Chairman and Chief Executive Officer, said, “The Firm produced a very strong quarter and record full-year results, with excellent performance across all three businesses and geographies. I am extremely proud of how our employees came together to support each other and our communities and deliver for our clients in an incredibly challenging year. Our unique business model continues to serve us well as we further execute on our long-term strategy with the acquisitions of E*TRADE and Eaton Vance. We enter 2021 with significant momentum, and I am very confident in our competitive position and our opportunities for continued growth.”
Highlights
James P. Gorman, Chairman and Chief Executive Officer, said, “The Firm produced a very strong quarter and record full-year results, with excellent performance across all three businesses and geographies. I am extremely proud of how our employees came together to support each other and our communities and deliver for our clients in an incredibly challenging year. Our unique business model continues to serve us well as we further execute on our long-term strategy with the acquisitions of E*TRADE and Eaton Vance. We enter 2021 with significant momentum, and I am very confident in our competitive position and our opportunities for continued growth.”
Highlights
- The Firm’s full year results reflect both record net revenues of $48 billion up 16% year over year and net income of $11 billion up 22%.
- The Firm delivered full year ROTCE of 15.2% or 15.4% excluding the impact of integration related expenses.4,5
- The full year Firm expense efficiency ratio was 70% excluding the impact of integration-related expenses.5,6
- Common Equity Tier 1 capital standardized ratio of 17.4%. • Institutional Securities delivered record full year net revenues of $25.9 billion. Fourth quarter net revenues were up 39% driven by continued strong client engagement in a constructive market environment.
- Wealth Management delivered a full year pretax margin of 23.0% (24.2% excluding $231 million of integration-related expenses).7 Fourth quarter results reflect growth in client assets, increases in bank deposits and lending as well as strong transactional activity.
- Strong Investment Management results reflect record asset management fees in both the quarter and full year driven by record AUM of $781 billion and record long-term net flows of $41 billion.
Morgan Stanley (MS) stock price chart over the last 5 years
The image below shows the stock price history of Morgan Stanley (MS) over the last 5 years. And its been a great time for Morgan Stanley stockholders with the stock increasing sharply by 21.5.5% over the last 5 years.
The stock of Morgan Stanley is trading at closer to its 52 week high than it is to its 52 week low which is a clear indication that the short term sentiment and momentum of Morgan Stanley's stock is postive at this point in time.
The stock of Morgan Stanley is trading at closer to its 52 week high than it is to its 52 week low which is a clear indication that the short term sentiment and momentum of Morgan Stanley's stock is postive at this point in time.
Morgan Stanley (MS) latest stock valuation
So what is Morgan Stanley stock worth based on the release of their 4th quarter 2019 and full fiscal 2019 earnings earnings report? Based on Morgan Stanley's latest earnings report our valuation models provide a target (full value) price for Morgan Stanley stock at $79.90 a stock. We therefore believe that the stock of Morgan Stanley is slightly undervalued at its current price of $74.84
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $79.90. Therefore we believe a good entry point into Morgan Stanley stock is at $71.90 or below. Since the stock of Morgan Stanley is trading at well below our suggested entry point we rate the stock of Morgan Stanley as a buy
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $79.90. Therefore we believe a good entry point into Morgan Stanley stock is at $71.90 or below. Since the stock of Morgan Stanley is trading at well below our suggested entry point we rate the stock of Morgan Stanley as a buy
Next earnings release date for Morgan Stanley
It is expected that Morgan Stanley (NYSE: MS) 1st quarter 2020 earnings report will be released in the middle of April 2020