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Morgan Stanley (MS) Gains But Lags Market: What You Should Know

Zacks Equity Research

Morgan Stanley (MS) closed at $49.53 in the latest trading session, marking a +1.73% move from the prior day. The stock lagged the S&P 500's daily gain of 2.62%. Elsewhere, the Dow gained 3.16%, while the tech-heavy Nasdaq added 2.06%.

Investors will be hoping for strength from MS as it approaches its next earnings release. In that report, analysts expect MS to post earnings of $0.98 per share. This would mark a year-over-year decline of 20.33%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $9.54 billion, down 6.83% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.81 per share and revenue of $37.76 billion, which would represent changes of -23.49% and -8.83%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for MS. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.48% lower within the past month. MS currently has a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that MS has a Forward P/E ratio of 12.77 right now. This represents a discount compared to its industry's average Forward P/E of 16.05.

Meanwhile, MS's PEG ratio is currently 1.33. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Financial - Investment Bank was holding an average PEG ratio of 2.04 at yesterday's closing price.

The Financial - Investment Bank industry is part of the Finance sector. This industry currently has a Zacks Industry Rank of 175, which puts it in the bottom 32% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow MS in the coming trading sessions, be sure to utilize Zacks.com.


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