Morgan Stanley Earnings Jump on Trading Gains

Banking, finance, and taxes

Published: October 17, 2014 8:05 am

Last Updated: April 28, 2020 2:00 am

Morgan Stanley (NYSE: MS) reported third-quarter 2014 results before markets opened Friday. The big bank reported diluted earnings per share (EPS) of $0.84 on revenue of $8.9 billion. In the same period a year ago, it reported EPS of $0.45 on revenue of $8 billion. Third-quarter results also compare to the consensus estimates for adjusted EPS of $0.54 on revenue of $8.17 billion.

Adjusted EPS for the third quarter totaled $0.65, which excludes a change in the fair value of certain of the bank’s long- and short-term borrowings of $215 million. Excluding the change to fair value, net revenues for the quarter were $8.7 billion, compared with $8.1 billion in the third quarter a year ago, and EPS totaled $0.77. Excluding a one-time tax benefit of $0.12 per share yields the $0.65 adjusted quarterly EPS, still well above the consensus estimate.

Morgan Stanley’s Basel III common equity tier 1 ratio was 14.3% and its tier 1 capital ratio was about 16.1%. The bank’s tangible book value per common share at the end of the quarter was $29.25, based on approximately 2 billion shares outstanding.

The bank did not provide guidance in its earnings release. The consensus estimate for fourth-quarter adjusted EPS is $0.58 on revenues of $8.45 billion. For the full year, the consensus calls for EPS of $2.43 on revenues of $33.84 billion.

The bank’s CEO said:

Morgan Stanley has delivered another quarter of earnings growth and strong performance based on consistent execution for our clients. We are well positioned to create superior returns for our shareholders, particularly as the U.S. economy continues to strengthen.

Investors are, of course, delighted with the bank’s performance in the quarter, and they are demonstrating their approval by bidding up the shares in Friday’s premarket session. Morgan Stanley was the last of the big banks to report results this week, and it capped a solid earnings showing.

Shares were trading up about 4% in the premarket to $33.85. The current 52-week range is $28.31 to $36.44. Thomson Reuters had a consensus analyst price target of around $36.40 before these results were announced.

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