Morgan Stanley Shares Rally on Q4 Results (MS)
Shares of Morgan Stanley (NYSE: MS) climbed 7.86% on Friday after the investment bank reported fiscal fourth-quarter results that beat the consensus forecast. Morgan Stanley’s results were bolstered by strong revenue growth in trading division and healthier margins in wealth management business.
Even though Morgan Stanley’s fixed-income trading business fared meekly compared to its rivals, and its overall return on equity, a measure on how effective a firm is in generating profits against every dollar invested by shareholders, stood only half of what Goldman Sachs posted, Chief Executive, James Gorman, mollified investors fear by saying that the bank was pursuing “aggressive measures” to enhance its ROE.
Speaking to analysts and investors in conference call, Gorman said that attaining 10% return on equity under prevailing market conditions will be possible for Morgan Stanley.
“After a year of significant challenges, Morgan Stanley has reached a pivot point, our firm is now poised to reach the returns of which it is capable on behalf of our shareholders,” said Gorman in a conference call.
Although analysts argued that the figure was least that is demanded by investors, it was still much better than what Morgan Stanley has achieved in the recent past, according to Thomson Reuters.
For the fourth quarter, income from continuing operations stood at $573 million, or 28 cents per share, against a loss of $222 million, or 13 cents per share, in the year earlier quarter. The Investment bank took a huge onetime charge in the same period of last year.
On adjusted basis (after excluding a charge related to changes in the value of Morgan Stanley’s debt), income came in at $894 million, or 45 cents per share. analysts polled by Thomson Reuters had forecasted earnings of 27 cents.
While revenue from sales and trading increased more than twofold to $2 billion from $867 million in the year earlier quarter, income from fixed income business, currency and commodities’ trading came at $811 million, up from $493 million reported in the same period of last year.
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Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.
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