Morgan Stanley Sails Past Estimates, Massive Discount to Book Value

Morgan Stanley (NYSE: MS) is hardly moving after its third-quarter earnings report, but that may be because traders and investors have seen earnings from so many of its peers and rivals now. Net revenues of $5.3 billion included the negative impact of $2.3 billion from “the tightening of Morgan Stanley’s debt-related credit spreads.” Its loss from continuing operations after items was $0.55 per share.

If you back out the items, Morgan Stanley posted revenues of $7.6 billion and its earnings would come to $0.28 per common share. Thomson Reuters had estimates of $0.24 EPS and $6.36 billion in revenues. Morgan Stanley completed the purchase of an additional 14% stake in the joint venture of Morgan Stanley Smith Barney.

Morgan Stanley’s Tier 1 capital ratio under Basel I was approximately 16.7% and its Tier 1 common ratio was approximately 13.7% at the end of the quarter. The bank holding company (that has no bank) listed its quarter-end book value per common share at $30.53 and its tangible book value per common share was $26.65.

The end game is that Morgan Stanley still trades at what is an embarrassingly low discount to its book value. Shares are up 1.3% at $18.75 and the 52-week range is $12.26 to $21.19.

JON C. OGG