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Morgan Stanley is slated to release its Q4 and full-year 2019 results on January 16, 2020. For FY 2019, Trefis estimates that the company will report:Revenues would marginally decrease to $40.1 billion primarily due to negative growth in the investment banking and equity trading segment. Further, it is slightly lower than the consensus estimate of $40.2 billion.EPS figure would improve to $4.95 primarily due to the expected drop in outstanding shares as compared to the previous year, however, higher expenses would weigh on the net income margin. Further, the EPS figure would be marginally higher than the consensus estimate of $4.91.
We believe that stronger-than-expected earnings for FY 2019 would overshadow negative revenue growth and will likely result in a slight positive movement in Morgan Stanley's' stock price once earnings are announced. In fact, our forecast indicates that Morgan Stanley's valuation is $55 a share, which is roughly 5% more than the current price of around $53.
(1) Revenues expected to be slightly below consensus estimates
Trefis estimates Morgan Stanley's 2019 revenues to be $40.1 billion, slightly below the consensus estimate of $40.2 billion
Trefis Estimate of Total Revenues
(1) Institutional Securities $19.6 Bil (49%)
(2) Wealth Management $17.3 Bil (43%)
(3) Investment Management $3.1 Bil (8%)
TOTAL $40.1 Bil
Consensus $40.2 Bil
Surprise -($0.14)* Bil
(*) - Numbers don't add up due to rounding
(2) EPS likely to narrowly beat consensus estimates
Morgan Stanley's 2019 earnings per share (EPS) expected to be $4.95 per Trefis analysis, marginally higher than the consensus estimate of $4.91 per share
EPS - 2019E
Total Revenues $40.1 Bil
- Total Expenses $32.1 Bil(*)
Net Income $8.0 Bil (**)
÷ Shares Outstanding 1.6 Bil
(*) - The expense figure includes preferred dividend and other minority expenses
(**) - Numbers don't add up due to rounding
(3) Stock price estimate ~5% higher than market price
Trefis forecast for Morgan Stanley's 2019 earnings as well as P/E multiple are marginally higher than the market expectations, working out to a fair value of $55 for Morgan Stanley's stock, which is roughly 5% higher than the current market price of around $53.
Morgan Stanley's Share Price [= A x B]
EPS - 2019E [A]
Trailing P/E Multiple [B]
Morgan Stanley Stock (NYSE:MS)Morgan Stanley Revenues: How Does Morgan Stanley Make Money?All Trefis Industrials Company data
Detail about our forecast for Morgan Stanley's (1) Revenues, (2) EPS, and (3) P/E Multiple follow:
Notably, Morgan Stanley would likely add around $400 million in incremental revenues over 2019-2020, enabling it to touch $40.5 billion by 2020.
Our interactive dashboard analysis, How Does Morgan Stanley Make Money?, provides an in-depth view of the company's revenues along with our forecasts and a comparison of trends with peers Bank of America, JPMorgan and Goldman Sachs.
For 2020, we believe that increase in revenues coupled with a slightly higher growth in expenses will result in the net income margin figure shrinking to 19.7%Our interactive dashboard analysis, How Does Morgan Stanley Spend Its Money, provides an in depth view of the company's expenses.
(3) A trailing P/E multiple of 11.0x looks appropriate for Morgan Stanley's stock, which is slightly higher than the current implied P/E multiple of 10.7x
We use our full cash flow model for Morgan Stanley to arrive at a P/E multiple of 11.0x for a price estimate of $55
Note: P/E Multiples are based on Share Price at the end of the year, and reported (or expected) Adjusted Earnings for the full year
P/E Multiple MS
P/E Multiple Citi
P/E Multiple JPM
P/E Multiple GS
Our complete set of analyses on Morgan Stanley
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