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Morgan Stanley MS

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Company Report

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Morgan Stanley: Fair Value Estimate Up to $97; Strong Start to Year and Outlook Generally Positive

Michael Wong

We are increasing our fair value estimate for narrow-moat-rated Morgan Stanley to $97 from $88 per share. This implies a forward price/earnings ratio of about 13 times and a price/tangible book ratio of 2.4 times. Of the $9 increase in our fair value estimate, approximately $2 is from earnings accumulated since our previous valuation update. The remainder is from changes in our earnings forecast, such as from higher investment management revenue after the increase in US equity markets, and some lowering of how much shareholder equity we assess the company will need to retain for regulatory capital requirements.

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Price vs Fair Value

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MS is trading at a 197% premium.
Price
$100.32
Fair Value
$33.00
Uncertainty
Medium
1-Star Price
$711.28
5-Star Price
$68.90
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Increases in asset prices can materially improve revenue and operating margins in the company's asset-management and wealth-management segments. There's also a sweet spot to the level of interest rates that can improve earnings.

Bears

Operating leverage has recently led to strong earnings performance, but any pullback in revenue from a recession could also lead to material margin contraction.

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Trading Information

Previous Close Price
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Day Range
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52-Week Range
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Bid/Ask
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Market Cap
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Volume/Avg
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Key Statistics

Price/Earnings (Normalized)
16.58
Price/Sales
3.20
Dividend Yield (Trailing)
3.39%
Dividend Yield (Forward)
3.39%
Total Yield
6.89%

Company Profile

Morgan Stanley is a global investment bank whose history, through its legacy firms, can be traced back to 1924. The company has institutional securities, wealth management, and investment management segments. The company had over $4 trillion of client assets as well as over 80,000 employees at the end of 2022. Approximately 50% of the company's net revenue is from its institutional securities business, with the remainder coming from wealth and investment management. The company derives about 30% of its total revenue outside the Americas.
Sector
Financial Services
Industry
Capital Markets
Stock Style Box
Large Value
Total Number of Employees
80,000
Website
https://www.morganstanley.com

Competitors

Valuation

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Metric
MS
GS
BAC
Price/Earnings (Normalized)
 16.5817.2113.01
Price/Book Value
 1.801.461.15
Price/Sales
 3.203.303.18
Price/Cash Flow
 10.509.638.42
Price/Earnings
MS
GS
BAC

Financial Strength

Metric
MS
GS
BAC
Quick Ratio
 ———
Current Ratio
 ———
Interest Coverage
 ———
Quick Ratio
No chart available

Profitability

Metric
MS
GS
BAC
Return on Assets (Normalized)
 1.02%0.80%0.92%
Return on Equity (Normalized)
 13.37%12.72%11.28%
Return on Invested Capital (Normalized)
 ———
Return on Assets
MS
GS
BAC
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