Reviewing Jefferies Group (JEF) & Morgan Stanley (MS)

Jefferies Group (NYSE: JEF) and Morgan Stanley (NYSE:MS) are both investment banking & brokerage services – nec companies, but which is the better stock? We will compare the two businesses based on the strength of their analyst recommendations, valuation, institutional ownership, risk, profitability, dividends and earnings.

Profitability

This table compares Jefferies Group and Morgan Stanley’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Jefferies Group N/A N/A N/A
Morgan Stanley 16.76% 10.07% 0.85%

Valuation & Earnings

This table compares Jefferies Group and Morgan Stanley’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Jefferies Group N/A N/A N/A $1.09 N/A
Morgan Stanley $37.95 billion 2.32 $5.98 billion $3.61 13.51

Morgan Stanley has higher revenue and earnings than Jefferies Group. Jefferies Group is trading at a lower price-to-earnings ratio than Morgan Stanley, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Jefferies Group and Morgan Stanley, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Jefferies Group 0 0 0 0 N/A
Morgan Stanley 1 6 15 2 2.75

Morgan Stanley has a consensus target price of $50.68, suggesting a potential upside of 3.95%.

Dividends

Morgan Stanley pays an annual dividend of $1.00 per share and has a dividend yield of 2.1%. Jefferies Group does not pay a dividend. Morgan Stanley pays out 27.7% of its earnings in the form of a dividend. Jefferies Group has raised its dividend for 3 consecutive years.

Insider and Institutional Ownership

85.1% of Morgan Stanley shares are owned by institutional investors. 0.4% of Morgan Stanley shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

Morgan Stanley beats Jefferies Group on 10 of the 12 factors compared between the two stocks.

Jefferies Group Company Profile

Jefferies Group LLC and its subsidiaries operate as a securities and investment banking firm. The Company operates in two business segments: Capital Markets segment consists of the Company’s securities and commodities trading activities and its investment banking activities, and Asset Management segment includes asset management activities and related services. On July 1, 2011, the Company acquired the Bache Global Commodities Group from Prudential Financial, Inc., and as of November 30, 2011, the Company operated a futures commission merchant through Jefferies Bache, LLC in the United States and a global commodities and financial derivatives broker through Jefferies Bache Limited in the United Kingdom. Effective March 1, 2013, Leucadia National Corp (Leucadia) acquired the remaining 71.4% interest in Jefferies Group Inc . Effective March 1, 2013, Leucadia National Corp (Leucadia) acquired the remaining 71.4% interest in Jefferies Group Inc.

Morgan Stanley Company Profile

Morgan Stanley is a financial holding company. The Company’s segments include Institutional Securities, Wealth Management and Investment Management. The Company’s Institutional Securities business segment provides investment banking, sales and trading, and other services to corporations, governments, financial institutions and high-to-ultra high net worth clients. The Company’s Wealth Management business segment provides an array of financial services and solutions to individual investors and small-to-medium sized businesses and institutions covering brokerage and investment advisory services, market-making activities in fixed income securities, financial and wealth planning services, annuity and insurance products, credit and other lending products, banking and retirement plan services. The Company’s Investment Management business segment provides a range of investment strategies and products.

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