Morgan Stanley Boasts ‘Strong Momentum’ After Q4 Earnings Beat

By Chris Lange Updated Jan 12, 4:23AM EST · Published Jan 18, 8:45AM EST

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Morgan Stanley Boasts ‘Strong Momentum’ After Q4 Earnings Beat — © Thinkstock

Morgan Stanley (NYSE: MS) reported its fourth-quarter financial results before the markets opened on Thursday. The company said that it had $0.84 in earnings per share (EPS) and $9.5 billion in revenue, compared with consensus estimates from Thomson Reuters that called for $0.77 in EPS on revenue of $9.19 billion. The same period from last year reportedly had EPS of $0.81 and $9.02 billion in revenue.

During this quarter, Morgan Stanley recorded a net discrete tax provision of $990 million, comprised of an approximate $1.2 billion net discrete tax provision as a result of the enactment of the Tax Cuts and Jobs Act, primarily from the remeasurement of certain net deferred tax assets using the lower enacted corporate tax rate.

In terms of its segments, the investment bank reported as follows:

Institutional Securities net revenues were $4.5 billion reflecting strength in both underwriting and equity sales and trading, with lower results in fixed income sales and trading.

Wealth Management net revenues were $4.4 billion and pre-tax margin was 26%.4 Fee-based asset flows for the quarter were a record $20.9 billion.

Investment Management net revenues were $637 million. Assets under management were $482 billion and reflect positive net flows of $23.9 billion.

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At the end of the quarter, book value and tangible book value per common share were $38.54 and $33.48, respectively. Also the firm’s Common Equity Tier 1 and Tier 1 risk-based capital ratios under Standardized Approach transitional provisions were approximately 16.5% and 18.9%, respectively.

James P. Gorman, board chair and chief executive, commented:

Over the course of the full year we achieved the strategic objectives outlined two years ago. In 2017, pre-tax earnings grew by 18%, driven by a 10% increase in revenues, with growth across all our business segments. This, coupled with strong expense discipline demonstrates the Firm’s operating leverage. We enter 2018 with strong momentum aided by rising interest rates, tax reform and an evolving regulatory framework.

Shares of Morgan Stanley closed Wednesday at $55.35, with a consensus analyst price target of $58.22 and a 52-week range of $40.06 to $55.98. Following the announcement, the stock was up about 1.5% at $56.17 in early trading indications Thursday.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.