Morgan Stanley (MS) Stock Analysis and Metrics

Sector: Financial Services Industry: Capital Markets CIK: 0000895421

Market Cap 279.63 Bn

P/B 2.54

P/E 17.97

P/S 4.05

ROIC (Qtr) 3.59

Div Yield % 2.75

Rev 1y % (Qtr) 18.47

Total Debt (Qtr) 353.12 Bn

Debt/Equity (Qtr) 3.21

About

Morgan Stanley (MS), a prominent player in the financial services industry, has built a reputation for delivering institutional securities, wealth management, and investment management services to a diverse clientele. The company, headquartered in New York City, was originally incorporated in 1981 and is now a financial holding company regulated by the Federal Reserve System under the Bank Holding Company Act of 1956. In its primary business activities, Morgan Stanley caters to corporations, governments, financial institutions, and individual clients,...

Morgan Stanley (MS), a prominent player in the financial services industry, has built a reputation for delivering institutional securities, wealth management, and investment management services to a diverse clientele. The company, headquartered in New York City, was originally incorporated in 1981 and is now a financial holding company regulated by the Federal Reserve System under the Bank Holding Company Act of 1956.

In its primary business activities, Morgan Stanley caters to corporations, governments, financial institutions, and individual clients, offering a spectrum of services ranging from investment banking and sales to trading, wealth management, and investment management. The company's operations span across multiple countries and regions, enabling it to maintain a significant presence in the global financial markets.

Morgan Stanley's revenue generation is primarily driven by three business segments. First, the Institutional Securities segment provides investment banking, sales, and trading services to corporations, governments, and financial institutions. This segment includes equity and fixed income trading, mergers and acquisitions advisory services, and debt and equity underwriting. Second, the Wealth Management segment offers investment and wealth management services tailored for individual clients, encompassing brokerage services, investment advice, and portfolio management. High-net-worth individuals, families, and institutions constitute the clientele of this segment. Third, the Investment Management segment manages investment portfolios for institutional clients, including pension funds, endowments, and sovereign wealth funds. This segment's offerings expand to equity, fixed income, and alternative investment strategies.

The financial services industry is characterized by intense competition, with Morgan Stanley striving against numerous established firms and new entrants in pursuit of market share. The company's competitive advantages stem from its global reach, diversified product offerings, and strong brand reputation. By catering to major corporations, governments, and financial institutions, Morgan Stanley has solidified a substantial footing in the worldwide financial markets.

Morgan Stanley's customers encompass a broad array of individuals, families, and institutions, such as high-net-worth individuals and families, institutional investors, corporations and governments, and financial institutions. The company's extensive range of brand names and trade names attests to its diverse product and service offerings.

The institutional securities segment, underpinned by investment banking, sales, and trading services, features prominently with equity and fixed income trading, mergers and acquisitions advisory services, and debt and equity underwriting. The wealth management segment, addressing individual clients, stands out with brokerage services, investment advice, and portfolio management. Meanwhile, the investment management segment, catering to institutional clients, manages investment portfolios through equity, fixed income, and alternative investment strategies. These various segments and their respective brand names and trade names reflect Morgan Stanley's multifaceted approach to serving its clients and maintaining its competitive edge in the global financial services landscape.

Price action

Investment thesis

Bull case

Strong tangible asset base of 1341.98B provides 3.80x coverage of total debt 353.12B, indicating robust asset backing and low credit risk.
Cash position of 103.73B provides exceptional 705.67x coverage of minority interest expenses 147M, indicating strong liquidity.
Retained earnings of 112.43B represent substantial 1.02x of equity 109.96B, indicating strong internal capital generation.
Retained earnings of 112.43B provide strong 4.93x coverage of intangibles 22.82B, indicating quality earnings retention.
Strong tangible asset base of 1341.98B provides 58.80x coverage of intangibles 22.82B, indicating robust asset quality.

Bear case

Operating cash flow of (3.68B) barely covers its investment activities of (43.53B), with a coverage ratio of 0.08, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
Operating cash flow of (3.68B) provides thin coverage of dividend payments of (6.49B) with a 0.57 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
The company's operating cash flow of (3.68B) shows concerning coverage of stock compensation expenses of 1.85B, with a -1.99 ratio indicating potential earnings quality issues.
Free cash flow of (6.75B) provides weak coverage of capital expenditures of 3.07B, with a -2.20 ratio suggesting additional external financing needs for growth initiatives.
Operating cash flow of (3.68B) provides minimal -0.77x coverage of tax expenses of 4.78B, suggesting potential tax planning inefficiencies or unsustainable tax positions.

Peer comparison

Companies in the Capital Markets

S.No.	Ticker	Company	Market Cap	P/E	P/S	Total Debt (Qtr)
1	GS	Goldman Sachs Group Inc	284.23 Bn	17.94	4.84	911.32 Bn
2	MS	Morgan Stanley	279.63 Bn	17.97	4.05	353.12 Bn
3	SCHW	Schwab Charles Corp	179.33 Bn	23.09	7.83	27.59 Bn
4	HOOD	Robinhood Markets, Inc.	106.92 Bn	48.73	25.43	0.00 Bn
5	CRCL	Circle Internet Group, Inc.	40.97 Bn	261.00	24.22	0.15 Bn
6	IBKR	Interactive Brokers Group, Inc.	28.23 Bn	30.79	4.75	28.43 Bn
7	LPLA	LPL Financial Holdings Inc.	27.60 Bn	33.13	1.77	7.52 Bn
8	FUTU	Futu Holdings Ltd	22.89 Bn	18.13	8.54	1.75 Bn

Industry comparisons

Current Valuation	Value	Ind Avg
EV to Assets EV to Assets	0.38	1.07
EV to Cash from Ops. EV/CFO	-142.11	15.33
EV to Debt EV to Debt	1.48	21.89
EV to EBIT EV/EBIT	24.95	-0.80
EV to EBITDA EV/EBITDA	19.57	11.20
EV to Free Cash Flow [EV/FCF] EV/FCF	-77.49	43.08
EV to Market Cap EV to Market Cap	1.87	-0.05
EV to Revenue EV/Rev	7.58	12.82
Price to Book Value [P/B] P/B	2.54	3.09
Price to Earnings [P/E] P/E	17.97	6.20

Dividend Metrics	Value	Ind Avg
Dividend Coverage Ratio Div Coverage (Qtr)	2.19	4.22
Dividend Payout Ratio % Div Payout % (Qtr)	38.40	10.37
Dividend per Basic Share Div per Share (Qtr)	3.86	0.70
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr)	-89.76	-8.68
Interest Coverage Interest Coverage	0.00	37.53

Growth Metrics	Value	Ind Avg
Capex Growth (1y) % Capex 1y % (Qtr)	12.64	-12,429.64
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr)	-1.57	1,588.78
Dividend Growth (1y) % Div 1y % (Qtr)	8.59	4.88
EBIAT Growth (1y) % EBIAT 1y % (Qtr)	44.54	270.93
EBITDA Growth (1y) % EBITDA 1y % (Qtr)	34.50	333.57
EBIT Growth (1y) % EBIT 1y % (Qtr)	43.19	3,103.22
EBT Growth (1y) % EBT 1y % (Qtr)	43.19	3,039.53
EPS Growth (1y) % EPS 1y % (Qtr)	47.68	24.25
FCF Growth (1y) % FCF 1y % (Qtr)	78.72	-80.08
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr)	18.04	51.33

Liquidity Ratios	Value	Ind Avg
Asset Utilization Ratio Asset Util Ratio (Qtr)	0.05	0.42
Cash Payout Ratio Cash Payout (Qtr)	-5.29	-0.08
Cash Ratio Cash Ratio	0.00	2.01
Current Ratio Current Ratio	0.00	3.47
Debt to Equity Ratio Debt/Equity (Qtr)	3.21	1.46
Interest Cover Ratio Interest Cover Ratio	0.00	37.53
Times Interest Earned Times Interest Earned	0.00	37.53

Profitability	Value	Ind Avg
EBITDA Margin % EBITDA Margin % (Qtr)	37.90	76.68
EBIT Margin % EBIT Margin % (Qtr)	30.38	46.81
EBT Margin % EBT Margin % (Qtr)	30.38	58.57
Gross Margin % Gross Margin % (Qtr)	100.00	53.60
Net Profit Margin % Net Margin % (Qtr)	22.60	29.41

Morgan Stanley (NYSE: MS)

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