Were Morgan Stanley's Q1 Earnings Good Enough?

Banking, finance, and taxes

Published: April 17, 2019 9:50 am

Last Updated: January 30, 2020 9:57 pm

Morgan Stanley (NYSE: MS) released its first-quarter financial results before the markets opened on Wednesday. The investment bank said that it had $1.33 in earnings per share (EPS) and $13.56 billion in revenue, compared with consensus estimates of $1.16 in EPS and revenue of $10.0 billion. The same period of last year reportedly had EPS of $1.45on $11.08 billion in revenue.

During the latest quarter, book value per common share totaled $42.83 while tangible book value per common share was $37.62. The common equity tier 1 capital ratio was 16.5% for the quarter.

In terms of its segments, the firm reported as follows:

Institutional Securities net revenues dropped to $5.20 billion from $6.10 billion year over year.
Wealth Management net revenues increased slightly to $4.39 billion from $4.37 billion.
Investment Management revenues increased to $804 million from $718 million.

Institutional Securities net revenues reflected solid results, despite a less favorable market environment characterized by lower volumes and volatility compared with a year ago.

Wealth Management delivered pretax income of $1.2 billion and a pretax margin of 27.1%, reflecting strong expense management while continuing to invest in the business.

Investment Management net revenues increased 12% on strong principal investment gains and solid asset management fees.

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

We delivered solid earnings despite a slow start to the year following the turbulent markets in the fourth quarter. With an ROE of 13.1% and ROTCE of 14.9%, our results demonstrated the stability and breadth of our global franchise. Even though risks to the global environment remain, markets have recovered and we are well positioned to serve our clients and invest in our businesses.

Shares of Morgan Stanley were up 1.7% to$ 47.36 early Wednesday, in a 52-week range of $36.74 to $55.64. The consensus price target is $52.07.

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