Morgan Annual Report 2013: Company Shares Up 2% after Beating Estimates

Morgan Stanley Annual Report 2013

Morgan Stanley Annual Report 2013

Morgan Stanley is a financial services firm, the second largest investment bank in U.S.A that provides financial products and services to a diversified group of customers and clients that includes individual, corporation, governments and financial institutions. The firm operates through its affiliates and subsidiaries. The company has posted stronger than expected return on the fourth quarter end result in the December 2013 year end. The company took the advantage of rising stock market and consequently earned more from its retail brokerage. Its asset management business managed to secure more assets than earlier estimate from its wealthy clients that it manages. As a result, the company has raised its target estimate in coming year. The company has reported EPS (Ex Debt Valuation Adjustment) profit of $0.50 beating analyst estimates of $0.40 as per data compiled by Bloomberg/ Businessweek. The adjusted revenue for the September quarter end came to $8.1 billion which also beats estimates.

The prudent decision by the Morgan Stanley management took effect in the last June when the Federal Reserve nodded its plan to buyback $500 million worth of its stock; it was truly “transformational”– undoubtedly it benefited the company and its shareholders as well, share price went up by 4%. The company was permitted in June to buy back the remaining (35%) of its wealth management business that it formed with Citigroup during the crisis. Since then the company has constantly strived to diversify and taken itself out of risky trading businesses and concentrate more on low yielding but steady wealth management business.

In the fourth quarter, the Citigroup’s Smith Barney unit that the company purchased generated a pretax margin of 19% through higher commission and positive inflows and the company’s profit margin touched 25%. However, this margin still lags its major rival Bank of America Corp’s wealth management return at 26.6%.

The following table shows the forecast of Morgan and Stanley’s expected earnings and revenues forecasts.

Analyst Estimates on Earning In US$ March  Quarter Ending 2014 June Quarter Ending 2014 Current Year Ending 2014 Next Year Ending 2015
Average Estimate EPS 0.65 0.64 2.47 2.95
High Estimate EPS 0.76 0.74 2.75 3.40
Low Estimate EPS 0.55 0.53 2.04 2.42
One Year Before (2013) 0.61 0.45 2.06 2.47
Number. of Analysts 23 23 32 28

Estimated Revenue

Average Estimate 8.86 Billion 8.75 Billion 34.79 Billion 37.20 Billion
High Estimate 9.21 Billion 9.07 Billion 37.56 Billion 41.92 Billion
Low Estimate 8.42 Billion 8.41 Billion 31.41 Billion 34.11 Billion
Number. of Analysts 17 17 27 25

Earning History & Estimation

March  2013 June  2013 September 2013 December 2013
Actual EPS 0.61 0.45 0.50 0.50
EPS Estimated 0.57 0.43 0.40 0.45
SURPRISE 7.00% 4.70% 25.00% 11.10%

Morgan Stanley Annual Report 2013

Here is a synopsis of the Morgan Stanley Company’s performance (Figures are for December Year end and in USD):

  • The total revenue of the company at the December year end: $32,417 million (2013), $26,143 million (2012), $32,106 million (2011).
  • Gross Profit: $28,938 million (2013), $22,694 million (2012) & $28,662 (2011)
  • Net Interest Income: $778 million (2013), $(–) 199 million (2012), $ 357 million (2011)
  • Earnings per Share: $1.41 (2013), $(–) 0.02 (2012), $ 1.23 (2011).
  • Pre Tax Wealth Management Income: $709 million (2013), $562M (2012) on revenue of $3.7 billion (2013) and $3.3billion (2012)
  • Pre Tax Profit Margin was 40%.
  • Pre Tax Income from Investment management: $337million (2013) and $221million (2012)
  • Asset management fees were more by $2 billion, a 7% increase on year to year basis. Similarly transactional revenue was more by $1.1billion an increase by 11.6%.

Figures for December 2013 indicate preliminary numbers.

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