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Category: Stock Market and Morgan Stanley
Date: 19 April 2021 Stock Price of Morgan Stanley (MS): $78.59 Market Capital of Morgan Stanley: $147 billion We take a look at the 1st quarter earnings report of their 2021 fiscal year of Morgan Stanley, a diversified financial services provider. The group reported revenues of $15.7 billion and net income of $3.98 billion for the 1st quarter of their 2021 fiscal year.
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James P. Gorman, Chairman and Chief Executive Officer, said, “The Firm delivered record results. The integrated Investment Bank continues to thrive. We closed the acquisition of Eaton Vance which takes Investment Management to over $1.4 trillion of assets."
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 1st quarter 2021 earnings report
1st quarter 2021 highlights
• The Firm achieved record net revenues and net income5 with strong contributions across each of our business segments.
• The Firm delivered ROTCE of 21.1% or 21.4% excluding the impact of integration-related expenses. 6,7
• The Firm expense efficiency ratio was 67% or 66% excluding the impact of integration-related expenses.7,8
• Common Equity Tier 1 capital standardized ratio was 16.8%.
• The Firm repurchased $2.1 billion of its outstanding common stock.
• Institutional Securities reported record net revenues5 up 66% reflecting strength across businesses and geographies on continued strong client engagement and higher volumes in a constructive market environment, notwithstanding losses related to a single client event in the quarter.
• Wealth Management delivered a pre-tax margin of 26.9% or 27.9% excluding integration-related expenses. 7,9 Results reflect strong levels of client engagement, record net new assets and fee-based flows of $105 billion and $37 billion, respectively, and growth in bank lending.
• Investment Management results reflect strong asset management fees on AUM of $1.4 trillion, which include the impact of the Eaton Vance acquisition, along with strong positive net flows across all asset classes.
• The Firm achieved record net revenues and net income5 with strong contributions across each of our business segments.
• The Firm delivered ROTCE of 21.1% or 21.4% excluding the impact of integration-related expenses. 6,7
• The Firm expense efficiency ratio was 67% or 66% excluding the impact of integration-related expenses.7,8
• Common Equity Tier 1 capital standardized ratio was 16.8%.
• The Firm repurchased $2.1 billion of its outstanding common stock.
• Institutional Securities reported record net revenues5 up 66% reflecting strength across businesses and geographies on continued strong client engagement and higher volumes in a constructive market environment, notwithstanding losses related to a single client event in the quarter.
• Wealth Management delivered a pre-tax margin of 26.9% or 27.9% excluding integration-related expenses. 7,9 Results reflect strong levels of client engagement, record net new assets and fee-based flows of $105 billion and $37 billion, respectively, and growth in bank lending.
• Investment Management results reflect strong asset management fees on AUM of $1.4 trillion, which include the impact of the Eaton Vance acquisition, along with strong positive net flows across all asset classes.
Morgan Stanley's management commentary on their 1st quarter 2021 earnings report
NEW YORK, April 16, 2021 – Morgan Stanley (NYSE: MS) today reported net revenues of $15.7 billion for the first quarter ended March 31, 2021 compared with $9.8 billion a year ago. Net income applicable to Morgan Stanley was $4.1 billion, or $2.19 per diluted share, 1 compared with net income of $1.7 billion, or $1.01 per diluted share, 1 for the same period a year ago. The comparisons of current year results to prior periods were impacted by the acquisitions of Eaton Vance Corp. (“Eaton Vance”) completed on March 1, 2021, reported in the Investment Management segment and E*TRADE Financial Corporation (“E*TRADE”) completed in the fourth quarter of 2020, reported in the Wealth Management segment
James P. Gorman, Chairman and Chief Executive Officer, said, “The Firm delivered record results. The integrated Investment Bank continues to thrive. We closed the acquisition of Eaton Vance which takes Investment Management to over $1.4 trillion of assets. Wealth Management brought in record flows of $105 billion. The Firm is very well positioned for growth in the years ahead.”
- The Firm resumed its Share Repurchase Program in the first quarter of 2021, subject to limitations on distributions from the Federal Reserve. The Firm repurchased $2.1 billion of its outstanding common stock in the quarter.
- The Board of Directors declared a $0.35 quarterly dividend per share, payable on May 14, 2021 to common shareholders of record on April 30, 2021
Morgan Stanley (NYSE: MS) stock price chart over the last 5 years
The image below shows the stock price history of Morgan Stanley over the last 5 years. And it's been a good time for Morgan Stanley stockholders. Over the last 5 years the stock of Morgan Stanley returned of 199.6% to Morgan Stanley stockholders over the last 5 years. No investor would say no to those type of returns
The stock of Morgan Stanley is trading at very close to its 52 week high and is far away from its 52 week low which is a clear indication that the short term sentiment and momentum of Morgan Stanley's stock is very positive
The stock of Morgan Stanley is trading at very close to its 52 week high and is far away from its 52 week low which is a clear indication that the short term sentiment and momentum of Morgan Stanley's stock is very positive
Morgan Stanley (MS) vs Citibank (C) vs Bank of America (BAC)
The image below shows the stock price performance of Morgan Stanley (MS) vs Citibank (C) vs Bank of America (BAC) over the last 5 years. The summary below shows the stock price returns provided by the three financial institutions over the last 5 years.
- Morgan Stanley (MS): 199.6%
- Bank of America (BAC): 176.8%
- Citigroup (C): 64.7%
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 $70.60 a stock. We therefore believe that the stock of Morgan Stanley is undervalued at its current price of $56.44
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 $70.60. Therefore we believe a good entry point into Morgan Stanley stock is at $63.50 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 $70.60. Therefore we believe a good entry point into Morgan Stanley stock is at $63.50 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) 2nd quarter 2021 earnings report will be released in the middle of July 2021