Was Morgan Stanley’s (NYSE:MS) Earnings Growth Better Than The Industry’s?
When Morgan Stanley (NYSE:MS) released its most recent earnings update (30 September 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Morgan Stanley has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see MS has performed. See our latest analysis for Morgan Stanley
Did MS’s recent earnings growth beat the long-term trend and the industry?
I prefer to use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This technique enables me to analyze various companies in a uniform manner using the latest information. For Morgan Stanley, its most recent bottom-line (trailing twelve month) is $6,645.0M, which, relative to last year’s level, has climbed up by 39.66%. Given that these values may be relatively myopic, I’ve estimated an annualized five-year figure for Morgan Stanley’s net income, which stands at $3,351.7M. This suggests that, on average, Morgan Stanley has been able to gradually grow its profits over the last couple of years as well.
How has it been able to do this? Let’s see whether it is only due to an industry uplift, or if Morgan Stanley has seen some company-specific growth. Over the past few years, Morgan Stanley increased its bottom line faster than revenue by effectively controlling its costs. This brought about a margin expansion and profitability over time. Looking at growth from a sector-level, the US industry industry has been growing its average earnings by double-digit 18.00% over the past year, and 11.21% over the previous few years. This shows that any uplift the industry is benefiting from, Morgan Stanley is able to amplify this to its advantage.
What does this mean?
Though Morgan Stanley’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Morgan Stanley gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Morgan Stanley to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for MS’s future growth? Take a look at our free research report of analyst consensus for MS’s outlook.
2. Financial Health: Is MS’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
