Morgan Stanley Rises Marginally Despite Strong Earnings Beat

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When Morgan Stanley (NYSE: MS) reported its third-quarter financial results before the markets opened on Wednesday, the company said it had $0.81 in earnings per share (EPS) and $8.9 billion in revenue. The Thomson Reuters consensus estimates were EPS of $0.63 and $8.17 billion in revenue. The same period of last year reportedly had $0.34 in EPS and revenue of $7.77 billion.

At the end of the quarter, the firm’s Common Equity Tier 1 and Tier 1 risk-based capital ratios under Advanced Approach transitional provisions were roughly 16.9% and 18.9%, respectively.

At the same time, book value and tangible book value per common share totaled $37.11 and $32.13, respectively, based on about 1.9 billion shares outstanding.

The company’s business segments reported:

  • Institutional Securities net revenues were $4.6 billion reflecting strong performance across our sales and trading franchise, continued strength in M&A advisory and subdued underwriting.
  • Wealth Management net revenues were $3.9 billion and pre-tax margin was 23%.3 Fee-based asset flows for the quarter were $13.5 billion.
  • Investment Management reported net revenues of $552 million with assets under management or supervision of $417 billion.

During the quarter, the Morgan Stanley repurchased $1.25 billion of its common stock or 41 million shares. The board of directors declared a $0.20 quarterly dividend per share, payable on November 15, to common shareholders of record on October 31.

James P. Gorman, board chair and chief executive, commented:

This quarter we saw record revenues in Wealth Management and a strong performance in our Sales and Trading business. While the environment was more challenging for our equity underwriting and asset management businesses, our expense initiatives remain on track. Overall the results reflect steady progress against our long term strategic goals.

Shares of Morgan Stanley closed Tuesday up 1.7% at $32.32, with a consensus analyst price target of $33.85 and a 52-week trading range of $21.16 to $35.74. Following the release of the earnings report, the stock was up about 1.3% at $32.75 in early trading indications Wednesday.