Critical Analysis: Morgan Stanley (MS) and The Competition

Morgan Stanley (NYSE: MS) is one of 31 publicly-traded companies in the “Security brokers & dealers” industry, but how does it compare to its peers? We will compare Morgan Stanley to related companies based on the strength of its earnings, risk, profitability, institutional ownership, dividends, valuation and analyst recommendations.

Analyst Recommendations

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This is a breakdown of recent ratings and price targets for Morgan Stanley and its peers, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Morgan Stanley 2 6 13 1 2.59
Morgan Stanley Competitors 323 1386 1448 67 2.39

Morgan Stanley presently has a consensus target price of $55.74, suggesting a potential upside of 1.90%. As a group, “Security brokers & dealers” companies have a potential upside of 0.79%. Given Morgan Stanley’s stronger consensus rating and higher probable upside, research analysts plainly believe Morgan Stanley is more favorable than its peers.

Profitability

This table compares Morgan Stanley and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Morgan Stanley 14.10% 10.07% 0.85%
Morgan Stanley Competitors 5.64% 3.71% 5.13%

Valuation and Earnings

This table compares Morgan Stanley and its peers top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Net Income Price/Earnings Ratio
Morgan Stanley $43.64 billion $6.11 billion 15.19
Morgan Stanley Competitors $5.87 billion $745.79 million 24.55

Morgan Stanley has higher revenue and earnings than its peers. Morgan Stanley is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Dividends

Morgan Stanley pays an annual dividend of $1.00 per share and has a dividend yield of 1.8%. Morgan Stanley pays out 27.8% of its earnings in the form of a dividend. As a group, “Security brokers & dealers” companies pay a dividend yield of 1.6% and pay out 35.0% of their earnings in the form of a dividend. Morgan Stanley has raised its dividend for 4 consecutive years. Morgan Stanley is clearly a better dividend stock than its peers, given its higher yield and lower payout ratio.

Volatility & Risk

Morgan Stanley has a beta of 1.54, meaning that its share price is 54% more volatile than the S&P 500. Comparatively, Morgan Stanley’s peers have a beta of 8.84, meaning that their average share price is 784% more volatile than the S&P 500.

Institutional and Insider Ownership

86.1% of Morgan Stanley shares are held by institutional investors. Comparatively, 63.6% of shares of all “Security brokers & dealers” companies are held by institutional investors. 0.2% of Morgan Stanley shares are held by insiders. Comparatively, 21.8% of shares of all “Security brokers & dealers” companies are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Summary

Morgan Stanley beats its peers on 11 of the 15 factors compared.

About Morgan Stanley

Morgan Stanley, a financial holding company, provides various financial products and services to corporations, governments, financial institutions, and individuals in the Americas, Europe, the Middle East, Africa, and Asia. The company operates through three segments: Institutional Securities, Wealth Management, and Investment Management. The Institutional Securities segment offers capital raising and financial advisory services, including services related to the underwriting of debt, equity, and other securities, as well as advice on mergers and acquisitions, restructurings, real estate, and project finance. This segment also provides sales and trading services, such as sales, financing, and market-making services in equity securities and fixed income products consisting of foreign exchange and commodities, as well as prime brokerage services; corporate loans, commercial and residential mortgage lending, and asset-backed lending; financing for equities and commodities customers; loans to municipalities; and investment and research services. The Wealth Management segment offers various financial services and solutions covering brokerage and investment advisory services, financial and wealth planning services, annuity and insurance products, credit and other lending products, and banking and retirement plan services to individual investors and small to medium-sized businesses/institutions. The Investment Management segment provides various investment strategies and products comprising equity, fixed income, liquidity, and alternative/other products to defined benefit/defined contribution plans, foundations, endowments, government entities, sovereign wealth funds, insurance companies, and third-party fund sponsors and corporations through a network of institutional and intermediary channels. Morgan Stanley was founded in 1924 and is headquartered in New York, New York.

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