Greenhill & Co., Inc. (GHL) & Morgan Stanley (MS) Head-To-Head Review

Greenhill & Co., Inc. (NYSE: GHL) and Morgan Stanley (NYSE:MS) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, profitability, earnings, institutional ownership, risk, analyst recommendations and valuation.

Profitability

This table compares Greenhill & Co., Inc. and Morgan Stanley’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Greenhill & Co., Inc. -7.24% -0.10% -0.05%
Morgan Stanley 15.09% 11.10% 0.93%

Earnings and Valuation

This table compares Greenhill & Co., Inc. and Morgan Stanley’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Greenhill & Co., Inc. $239.18 million 2.85 -$26.65 million ($0.28) -102.86
Morgan Stanley $43.64 billion 1.94 $6.11 billion $3.60 13.28

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

Institutional & Insider Ownership

96.9% of Greenhill & Co., Inc. shares are held by institutional investors. Comparatively, 85.2% of Morgan Stanley shares are held by institutional investors. 15.6% of Greenhill & Co., Inc. shares are held by company insiders. Comparatively, 0.2% of Morgan Stanley shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Dividends

Greenhill & Co., Inc. pays an annual dividend of $0.20 per share and has a dividend yield of 0.7%. Morgan Stanley pays an annual dividend of $1.00 per share and has a dividend yield of 2.1%. Greenhill & Co., Inc. pays out -71.4% of its earnings in the form of a dividend. Morgan Stanley pays out 27.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Morgan Stanley has increased its dividend for 4 consecutive years. Morgan Stanley is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Greenhill & Co., Inc. and Morgan Stanley, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Greenhill & Co., Inc. 4 2 0 0 1.33
Morgan Stanley 2 6 12 1 2.57

Greenhill & Co., Inc. presently has a consensus price target of $16.17, suggesting a potential downside of 43.87%. Morgan Stanley has a consensus price target of $56.89, suggesting a potential upside of 19.04%. Given Morgan Stanley’s stronger consensus rating and higher probable upside, analysts clearly believe Morgan Stanley is more favorable than Greenhill & Co., Inc..

Volatility & Risk

Greenhill & Co., Inc. has a beta of 1.15, suggesting that its stock price is 15% more volatile than the S&P 500. Comparatively, Morgan Stanley has a beta of 1.5, suggesting that its stock price is 50% more volatile than the S&P 500.

Summary

Morgan Stanley beats Greenhill & Co., Inc. on 13 of the 18 factors compared between the two stocks.

About Greenhill & Co., Inc.

Greenhill & Co., Inc., together with its subsidiaries, operates as an independent investment bank for corporations, partnerships, institutions, and governments worldwide. The company provides financial advisory services primarily related to mergers and acquisitions, restructurings, financings, and capital raisings. It is also involved in the provision of advisory services to clients in relation to divestitures, spin-offs, and other strategic transactions, as well as various stages of these transactions ranging from initial structuring to final execution. In addition, the company advises clients on strategic matters, such as activist response, defensive tactics, special committee projects, licensing deals, joint ventures, valuation, negotiation tactics, industry dynamics, structuring alternatives, and timing and pricing of transactions, as well as financing alternatives. Further, it advises debtors, creditors, governments, pension funds, and other stakeholders in companies experiencing financial distress, as well as potential acquirers of distressed companies and assets. Additionally, the company assists the clients in identifying and capitalizing on potential incremental sources of value, as well as who seek court-assisted reorganizations by developing and seeking approval for plans of reorganization. It advises on capital structures and sales or recapitalizations; other financing matters, including debt issuances, equity financings, and exchange offers; and initial public offerings and other equity capital market transactions. The company also assists general partners and sponsors in raising capital for new private funds; and provides related advisory services to pension funds, sovereign wealth funds, endowments, and other institutional investors, as well as on primary and secondary market transactions, and real estate funds. Greenhill & Co., Inc. was founded in 1996 and is headquartered in New York, New York.

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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