Discover the financial prowess of Morgan Stanley through comprehensive analysis. Explore fundamental and technical aspects, key financial ratios, and investment outlook. Unlock insights for informed investment decisions.
Morgan Stanley listed in NYSE (New York Stock Exchange), a renowned financial services corporation, offers comprehensive expertise in advising, originating, trading, managing, and distributing capital for institutions, governments, and individuals. Its three key business segments include Institutional Securities, Wealth Management, and Investment Management, catering to diverse financial needs with precision and innovation.
Morgan Stanley is a prominent American multinational investment bank and financial services company headquartered at 1585 Broadway in Midtown Manhattan, New York City. Boasting offices in 41 countries and a workforce exceeding 75,000 employees, the firm caters to a diverse clientele, ranging from corporations and governments to institutions and individuals. Notably, Morgan Stanley secured the 61st spot in the 2023 Fortune 500 list of the largest US corporations by total revenue. Furthermore, it clinched the 30th position in the prestigious Forbes Global 2000 rankings for the same year.
The inception of the original Morgan Stanley dates back to September 16, 1935, in response to the regulatory mandates of the Glass–Steagall Act. Founded by illustrious figures such as Henry Sturgis Morgan and Harold Stanley, the firm swiftly gained prominence, boasting a remarkable 24% market share in its inaugural year.
In 1997, Morgan Stanley underwent a transformative merger with Dean Witter Discover & Co., orchestrated under the leadership of Philip J. Purcell, who assumed the role of chairman and CEO of the newly formed entity, “Morgan Stanley Dean Witter Discover & Co.” Subsequently, in 2001, the firm reverted to its original moniker, “Morgan Stanley.”
Today, the firm’s primary areas of operation encompass institutional securities, wealth management, and investment management, underscoring its commitment to delivering comprehensive financial solutions. Recognized as systemically important by the Financial Stability Board, Morgan Stanley continues to wield significant influence in the global financial landscape.
In the realm of financial analysis, deciphering data tables can be akin to unravelling a mystery. Today, we delve into the intricate world of Morgan Stanley’s fundamental analysis, exploring key ratios spanning the last five years. Buckle up as we navigate through the labyrinth of valuation, liquidity, solvency, profitability, and efficiency ratios, shedding light on the financial health of this titan in the banking sector.
Fundamental analysis of Morgan Stanley | |||||
Ratio | LTM (Last Twelve Months) | September 2023 | September 2022 | September 2021 | September 2020 |
Valuation Ratio | |||||
Price to Earnings Ratio (PE) | 16.11 | 16.71 | 13.04 | 11.65 | 9.99 |
Price to Book Ratio | 1.546 | 1.533 | 1.436 | 1.662 | 1.079 |
Price Earnings to Growth Ratio | 2.09 | -1.051 | -0.551 | 0.474 | 0.407 |
EV to EBITDA | 54.82 | 21.78 | 20.57 | 11.97 | 12.01 |
Liquidity Ratio | |||||
Current Ratio | 1.402 | 0.411 | 0.582 | 1.195 | 1.141 |
Quick Ratio | 0.342 | 0.744 | 0.867 | 1.195 | 1.141 |
Solvency Ratio | |||||
Debt to Equity Ratio | 3.879 | 2.791 | 2.459 | 2.306 | 2.289 |
Interest Coverage Ratio | 0.281 | 0.278 | 0.889 | 11.96 | 3.037 |
Profitability Ratio | |||||
Gross Profit Margin | 64.61% | 100% | 100% | 100% | 100% |
Net Profit Margin | 15.02% | 17.93% | 21.97% | 26.65% | 24.29% |
Return on Equity (ROE) | 9.57% | 9.18% | 11.01% | 14.26% | 10.8% |
Return on Invested Capital | 1.49% | 0.99% | 1% | 1.46% | 1.12% |
Efficient Ratio | |||||
Inventory Turnover Ratio | -0.122 | 0 | 0 | 0 | 0 |
Receivables Turnover Ratio | 0.776 | 0.633 | 0.639 | 0.588 | 0.463 |
Valuation Ratios: Peering into Price Dynamics
Price to Earnings Ratio (PE):
The Price to Earnings Ratio (PE) serves as a yardstick for evaluating a company’s stock price relative to its earnings. Over the last twelve months, Morgan Stanley’s PE ratio stood at 16.11, showcasing a gradual increase from 11.65 in September 2020. This upward trajectory suggests growing investor confidence in the company’s earnings potential.
Price to Book Ratio:
Comparing a firm’s market value to its book value, the Price to Book Ratio gauges whether a stock is undervalued or overvalued. Morgan Stanley’s PB ratio in September 2023 was 1.546, demonstrating a slight uptick from the previous year. Despite fluctuations, this metric underscores the company’s solid financial standing.
Price Earnings to Growth Ratio (PEG):
A nuanced measure, the Price Earnings to Growth Ratio (PEG) factors in a company’s earnings growth rate. Morgan Stanley’s PEG ratio experienced fluctuations, dipping into negative territory in September 2022 before rebounding to 2.09 in the latest assessment. This volatility warrants a closer examination of the company’s growth prospects
EV to EBITDA:
Enterprise Value to Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) ratio delves into a firm’s overall value relative to its operational earnings. Morgan Stanley’s EV to EBITDA ratio surged to 54.82 in the most recent evaluation, reflecting a substantial increase compared to the previous years. This escalation may signal enhanced operational efficiency or strategic acquisitions.
Liquidity Ratios: Assessing Financial Flexibility
Current Ratio:
The Current Ratio measures a company’s ability to meet short-term liabilities with its short-term assets. While Morgan Stanley’s current ratio improved marginally from 0.411 in September 2022 to 1.402 in the latest assessment, it still warrants attention due to its volatility. Sufficient liquidity is vital for weathering unforeseen financial storms.
Quick Ratio:
Similar to the Current Ratio but more stringent, the Quick Ratio excludes inventory from current assets. Morgan Stanley’s Quick Ratio exhibited fluctuations over the years, underscoring the importance of maintaining a robust cash position to cover immediate obligations.
Solvency Ratios: Gauging Long-Term Viability
Debt to Equity Ratio:
The Debt to Equity Ratio illuminates a company’s leverage by comparing its debt to its equity. Morgan Stanley’s D/E ratio climbed steadily over the years, indicating an increasing reliance on debt financing. While moderate leverage can amplify returns, excessive debt may heighten financial risk.
Interest Coverage Ratio:
The Interest Coverage Ratio delineates a company’s capacity to service its debt obligations. Morgan Stanley’s interest coverage ratio plummeted to 0.281 in the most recent assessment, signaling potential challenges in meeting interest payments. Vigilance is imperative to prevent debt-induced distress.
Profitability Ratios: Unveiling Earnings Performance
Gross Profit Margin:
The Gross Profit Margin delineates the percentage of revenue retained after accounting for production costs. Morgan Stanley’s gross profit margin remained robust at 64.61%, underscoring its operational efficiency and pricing power.
Net Profit Margin:
Akin to the Gross Profit Margin but encompassing all expenses, the Net Profit Margin unveils a company’s bottom-line profitability. While Morgan Stanley’s net profit margin exhibited slight fluctuations, it remained above 15% consistently, reflecting healthy profitability levels.
Return on Equity (ROE):
The Return on Equity measures a company’s ability to generate profits from shareholders’ equity. Morgan Stanley’s ROE hovered around 10%, indicating commendable returns relative to shareholders’ investments.
Return on Invested Capital (ROIC):
The Return on Invested Capital assesses a company’s efficiency in deploying capital to generate returns. Despite minor fluctuations, Morgan Stanley’s ROIC remained relatively stable, reflecting prudent capital allocation practices.
Efficiency Ratios: Optimizing Operational Performance
Inventory Turnover Ratio:
The Inventory Turnover Ratio gauges how efficiently a company manages its inventory. Interestingly, Morgan Stanley’s inventory turnover ratio veered into negative territory, warranting further investigation into inventory management practices.
Receivables Turnover Ratio:
The Receivables Turnover Ratio elucidates how effectively a company collects payments from its customers. Morgan Stanley’s receivables turnover ratio exhibited slight fluctuations, emphasizing the importance of streamlining accounts receivable processes.
In conclusion, dissecting Morgan Stanley’s fundamental analysis unveils a tapestry of financial metrics reflecting its operational prowess, liquidity position, solvency outlook, profitability levels, and efficiency endeavours. While certain ratios exhibit volatility, the overarching narrative underscores Morgan Stanley’s resilience and adaptability in navigating the dynamic financial landscape. As investors and analysts alike pore over these numbers, one thing remains clear: understanding the nuances of these ratios is paramount in making informed investment decisions.
Technical Analysis of Morgan Stanley
Technical analysis of Morgan Stanley involves evaluating price movements and trading volumes to forecast future price movements. Technical analysis depends on charts and statistical indicators. analysts use various techniques, such as trend analysis, chart patterns, and technical indicators like moving averages or relative strength index (RSI), to identify potential buying or selling opportunities for Morgan Stanley. The main goal of technical analysis of Morgan Stanley share price is to predict future price movements based on historical data and market psychology, helping investors make informed decisions about when to enter or exit trades. So, bellow we are explaining Various techniques as of 7th May 2024 for technical analysis of Morgan Stanley.
Price action
Price action and price level of Morgan Stanley (all numbers are in USD) (As of 7th May 2024) | |||
Price action | Daily Timeframe | Weekly Timeframe | Monthly Timeframe |
Candlestick | Strong Bullish Candlestick | Strong Bullish Candlestick | Strong Bullish Candlestick |
Chart Pattern | Cup and Handle Pattern | Inverted Head and Shoulder Pattern | Bullish Flag Pattern |
Price Support Level | 90.5-91 | 85-86 | 71-72 |
Price Level | 95.8 is Current price | 52 weeks High 95.93 | 52 weeks low 69.42 |
Daily Timeframe: In Short-Term Trends
Candlestick Analysis:
On the daily timeframe, Morgan Stanley’s price action unfolds with vigor, characterized by a Strong Bullish Candlestick. With decisive momentum, the stock price surged past the pivotal level of 95, culminating in a robust close at 95.8. This bullish momentum hints at short-term strength and investor confidence in the stock.
Chart Pattern:
Echoing the bullish sentiment, the Cup and Handle Pattern emerges as a prominent chart formation, signaling a potential continuation of the uptrend. By crossing the neckline resistance at 95, the pattern activation underscores the resilience of buyers in propelling the stock higher.
Price Support Level:
Amidst the bullish fervor, the price support level of 90.5-91 acts as a solid foundation, providing a cushion against potential downside pressures. This support zone reinforces investor sentiment and fosters stability amidst market fluctuations.
Weekly Timeframe: Insight into Mid-Term Outlook
Candlestick Analysis:
Transitioning to the weekly timeframe, Morgan Stanley’s price action maintains its bullish trajectory, evident in the formation of a Strong Bullish Candlestick. Notably, the emergence of an inside candle on 15th April preceded a decisive breakout, affirming the underlying bullish bias. This pattern activation signifies sustained buying interest and sets the stage for further upside potential.
Chart Pattern:
In sync with the bullish narrative, the Inverted Head and Shoulder Pattern materializes, marking a significant reversal pattern. By breaching the neckline resistance at 95, the pattern activation validates the bullish thesis, fueling optimism among investors.
Price Support Level
As the weekly chart unfolds, the price support zone of 85-86 emerges as a stronghold, offering robust support amidst market turbulence. This zone serves as a bastion of stability, bolstering investor confidence and mitigating downside risks.
Monthly Timeframe: Gauging Long-Term Trends
Candlestick Analysis:
On the monthly timeframe, Morgan Stanley’s price action continues to exude strength, characterized by a resolute Bullish Candlestick. This steadfast momentum underscores the enduring bullish sentiment prevailing in the market.
Chart Pattern:
Mirroring the overarching bullish sentiment, the Bullish Flag Pattern unfurls, symbolizing a temporary pause in the uptrend before resuming its upward trajectory. This pattern activation heralds a period of consolidation and accumulation, setting the stage for a potential breakout.
Price Support Level
Despite the bullish fervour, it’s crucial to acknowledge the price support level of 71-72, serving as a pivotal anchor amidst the ebbs and flows of market sentiment. This support level instils confidence among investors, fostering resilience and stability over the long haul.
In conclusion, deciphering Morgan Stanley’s price action unveils a rich tapestry of bullish momentum, chart patterns, and key price levels across different timeframes. While short-term fluctuations may abound, the overarching narrative points towards a prevailing bullish bias, underpinned by robust chart formations and steadfast support levels. As investors and traders alike navigate the intricacies of the market, understanding these dynamics is paramount in making informed decisions and capitalizing on emerging opportunities.
Indicators Use for Technical Analysis
Bolinger Band (BB):
Bolinger Band Price level in Morgan Stanley (all numbers are in USD) (As of 7th May 2024) | |||
| Upper Band | Median | Lower Band |
Bolinger Band | 96.53 | 91.41 | 86.30 |
The Upper Bollinger Band stands at $96.53, indicating a slight resistance level near the stock’s 52-week high price. This means that historically, the stock has struggled to push past this level, suggesting potential resistance from sellers at this price point.
The Median, or middle line of the Bollinger Bands, sits at $91.41. This level serves as a support for the daily candlestick chart, implying that there’s a consistent level of buying interest or support from investors around this price. It acts as a buffer against significant price declines.
At $86.30, the Lower Bollinger Band represents a support level for the weekly candlestick chart. This means that there’s considerable buying interest or support from investors at this price level on a weekly basis. It serves as a safety net, preventing the stock from falling too far below this threshold.
Moving Average (MA):
Moving Average price level in daily candlestick of Morgan Stanley (all numbers are in USD) (As of 7th May 2024) | ||
Moving Average | 100 Day | 200 Day |
Simple Moving Average (SMA) | 89.52 | 85.54 |
Exponential Moving Average (EMA) | 88.90 | 87.20 |
Simple Moving Average (SMA):
Currently standing at $89.52, the 100-day Simple Moving Average indicates a consolidated price level. This means that over the past 100 days, the average price of Morgan Stanley’s stock has remained relatively stable. It acts as a reference point for identifying trends and potential areas of support or resistance.
At $85.54, the 200-day Simple Moving Average demonstrates strong support. This suggests that over the longer term, there’s consistent buying interest or support from investors around this price level. It serves as a key indicator of the stock’s overall trend and momentum.
Exponential Moving Average (EMA):
Showing strong support at $88.90, the 100-day Exponential Moving Average mirrors the sentiment of the SMA but places more emphasis on recent price data. This means that the EMA reacts more quickly to changes in price compared to the SMA, providing a more dynamic perspective on price movements.
Similarly, at $87.20, the 200-day Exponential Moving Average also indicates strong support. This reinforces the notion that over the long term, there’s a consistent level of buying interest or support from investors around this price level.
Conclusion
In conclusion, after a comprehensive analysis of Morgan Stanley’s fundamental and technical aspects, it’s evident that the company presents a compelling investment opportunity.
From a fundamental perspective, Morgan Stanley showcases robust financial health and operational prowess across various key metrics. Despite fluctuations in some ratios, the overall narrative underscores the company’s resilience and adaptability in navigating the dynamic financial landscape. With a rich history dating back to its inception in 1935, Morgan Stanley has consistently demonstrated its ability to evolve and thrive in the ever-changing market environment.
Furthermore, the technical analysis paints a bullish picture for Morgan Stanley’s stock. Across different timeframes, strong bullish candlestick patterns, chart formations like Cup and Handle and Bullish Flag, and key price support levels suggest an upward momentum in the stock’s price action. Indicators such as Bollinger Bands and Moving Averages reinforce this sentiment, indicating potential buying opportunities and strong support levels.
Considering Morgan Stanley’s prestigious position in the financial services sector, its global reach, and its commitment to delivering comprehensive financial solutions, investing in the company presents a favourable outlook for long-term growth and profitability. However, as with any investment decision, it’s essential for investors to conduct thorough due diligence, assess their risk tolerance, and consult with financial advisors before making any investment choices.
FAQs
- What services does Morgan Stanley provide?
Morgan Stanley offers a wide range of financial services including investment banking, wealth management, and investment management.
Where is Morgan Stanley headquartered? The headquarters of Morgan Stanley is located at 1585 Broadway in Midtown Manhattan, New York City.
- How many employees does Morgan Stanley have?
Morgan Stanley has a workforce exceeding 75,000 employees worldwide, operating in 41 countries.
- When was Morgan Stanley founded?
The original Morgan Stanley was founded on September 16, 1935, in response to the regulatory mandates of the Glass–Steagall Act.
- What are the key business segments of Morgan Stanley?
Morgan Stanley’s key business segments include Institutional Securities, Wealth Management, and Investment Management.
- Is Morgan Stanley publicly traded?
Yes, Morgan Stanley is publicly traded on the New York Stock Exchange (NYSE) under the ticker symbol “MS”.
- What is Morgan Stanley’s ranking in the Fortune 500 list?
In 2023, Morgan Stanley secured the 61st spot in the Fortune 500 list of the largest US corporations by total revenue.
- How does Morgan Stanley compare in the Forbes Global 2000 rankings?
In the prestigious Forbes Global 2000 rankings for the same year, Morgan Stanley clinched the 30th position, highlighting its global influence and stature.
- What was the significant event in Morgan Stanley’s history in 1997?
In 1997, Morgan Stanley underwent a transformative merger with Dean Witter Discover & Co., resulting in the formation of “Morgan Stanley Dean Witter Discover & Co.”
- What are some of Morgan Stanley’s key financial ratios?
Some key financial ratios analysed for Morgan Stanley include Price to Earnings Ratio (PE), Price to Book Ratio, Return on Equity (ROE), and Debt to Equity Ratio, among others. These ratios offer insights into the company’s valuation, profitability, and financial health.
