Morgan Stanley MS
What does Morgan Stanley do?
Morgan Stanley is a U.S. financial holding company headquartered in New York. The company serves corporations, governments, financial institutions and retail clients in the Americas, Europe, the Middle East, Africa and Asia. Its business is divided into three segments: Institutional Securities, Wealth Management and Investment Management.
In the Institutional Securities segment, revenue comes from advisory services on mergers and acquisitions, restructurings and project financings, from the issuance of bonds and equities, and from trading, financing and prime brokerage. Wealth Management earns income mainly from asset management, advisory fees and interest-rate-dependent business with wealthy private clients. Investment Management manages funds and mandates for institutional and private investors. In terms of competitive position, Morgan Stanley is one of the large global investment banks and at the same time one of the leading wealth managers for private clients. Its competitors include other large banks such as Goldman Sachs, JPMorgan and Bank of America, as well as specialized asset managers.
Score profile
Rank vs. Capital Markets (23 companies). 10 = top of the group, 5 = middle. Calculated from the metrics below, without AI.
Metrics compared with the industry
On profitability and quality, Morgan Stanley ranks in the middle in the group Capital Markets (5.8/10). On growth, the company ranks in the middle in the group Capital Markets (4.8/10). On valuation (higher = cheaper), the stock ranks in the middle in the group Capital Markets (5.1/10). On financial strength, Morgan Stanley ranks in the middle in the group Capital Markets (5.9/10).
| Metric | Stock | Group median | Ranking |
|---|---|---|---|
| Forward P/E | 13.7x | 13.0x | better than 43 % |
| Trailing P/E | 14.9x | 15.9x | better than 61 % |
| PEG ratio | 1.6x | 1.2x | better than 27 % |
| Price/sales | 3.7x | 3.6x | better than 46 % |
| Price/book | 2.7x | 2.7x | better than 50 % |
| Revenue growth | 10.8% | 10.8% | better than 50 % |
| Earnings growth | 8.2% | 10.1% | better than 46 % |
| Gross margin | 87.3% | 91.0% | better than 46 % |
| Operating margin | 39.0% | 22.2% | better than 70 % |
| Net margin | 25.6% | 15.8% | better than 72 % |
| Return on equity | 18.0% | 19.4% | better than 46 % |
| Debt/equity | 489.8% | 141.3% | better than 11 % |
| Current ratio | 2.1x | 1.5x | better than 74 % |
| Free cash flow yield | 0.0% | 0.0% | better than 55 % |
| Dividend yield | 2.5% | 1.8% | – |
| Payout ratio | 32.9% | 22.0% | – |
| Beta | 1.22 | 1.18 | – |
Valuation: what is Morgan Stanley worth?
Two valuation approaches – a discounted cash flow model and a valuation at the industry’s median multiples – give Morgan Stanley a model range of 177.04 USD to 187.57 USD per share.
22 analysts, average rating “Buy”, average price target 211.50 USD (+12.8%).
The full DCF matrix, the reverse DCF (what growth the price implies) and scenarios are part of the Pro analysis.
What the business depends on
- The volume of mergers, acquisitions and capital markets issuance largely determines revenue in the investment banking division.
- Client assets under management and the resulting fee-based revenue provide comparatively stable earnings in Wealth Management.
- Trading activity and market volatility influence revenue in equity and bond trading as well as in prime brokerage.
Risks
- Economic weakness or market turbulence can slow transactions and IPOs and weigh on the valuations of managed assets.
- Stricter regulation, higher capital requirements and supervisory proceedings can limit profitability and capital returns.
- Trading, credit and operational risks can lead to substantial losses in the event of market dislocations or counterparty defaults.
What to look for with Morgan Stanley
Return on equity relative to tangible book value is informative because it shows how efficiently the bank deploys its regulated capital across market cycles.