Morgan Stanley (MS) on April 18, 2016 reported net revenues of $7.8 billion for the first quarter ended March 31, 2016 compared with $9.9 billion a year ago.7 For the current quarter, net income applicable to Morgan Stanley was $1.1 billion, or $0.55 per diluted share,8 compared with income of $2.4 billion, or $1.18 per diluted share,8 for the same period a year ago.
The prior year quarter included a net discrete tax benefit of $564 million or $0.29 per diluted share primarily associated with the repatriation of non-U.S. earnings at a lower cost than originally estimated and a Debt Valuation Adjustment (DVA) of $125 million or $0.04 per diluted share.7,9 Excluding the tax benefit and DVA, net income applicable to Morgan Stanley was $1.8 billion, or $0.85 per diluted share in the prior year period.
Business Overview
- Institutional Securities net revenues were $3.7 billion reflecting challenging market conditions in Fixed Income & Commodities sales and trading and underwriting, with strength in Equity sales and trading and M&A advisory.
- Wealth Management net revenues were $3.7 billion and pre-tax margin was 21%.3 Results reflect strong growth in net interest income offset by weakness in transactional revenues. Fee based asset flows for the quarter were $5.9 billion.
- Investment Management reported net revenues of $477 million reflecting losses in private equity and real estate and stable asset management fees. Assets under management or supervision were $405 billion at the end of the quarter.
James P. Gorman, Chairman and Chief Executive Officer, said, “The first quarter was characterized by challenging market conditions and muted client activity. Against that backdrop, our businesses delivered stable results. While we see some signs of market recovery, global uncertainties continue to weigh on investor activity. We remain focused on executing against our priorities, helping clients navigate difficult markets while controlling our expenses and managing risk prudently.”
Morgan Stanley earnings per share showed an increasing trend of 81.3% for the current fiscal year. The company’s expected EPS growth rate for next fiscal year is 300%.Analysts project EPS growth over the next 5 years at 11.59%. It has EPS annual growth over the past 5 fiscal years of 3.4% when sales grew 0.1. It reported -20% sales drop, and -53.2% EPS decline in the last quarter.
The stock is trading at $27.37, up 30.06% from 52-week low of $21.16. The stock trades down -31.97% from its peak of $41.04 and 17.17% above the consensus price target of $32.07. Its volume clocked up at 12.72 million shares which is lower than the average volume of 15.07 million shares. Its market capitalization currently stands at $53.33B.
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