Morgan Stanley Earnings: Swings to a Loss

S&P 500 (NYSE:SPY) component Morgan Stanley (NYSE:MS) swung to a loss in the third quarter, missing analysts’ forecast. Morgan Stanley provides financial products and services to a group of clients and customers, including corporations, governments, financial institutions, and individuals.

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Morgan Stanley Earnings Cheat Sheet

Results: Reported a loss of $1 billion (55 cents per diluted share) in the quarter. The financial/investment brokers had net income of $2.2 billion or $1.14 per share in the year-earlier quarter.

Revenue: Fell 46.1% to $5.29 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Morgan Stanley fell short of the mean analyst estimate of 34 cents per share. It fell short of the average revenue estimate of $7.7 billion.

Quoting Management: James P. Gorman, Chairman and Chief Executive Officer, said, “Our third quarter results show a balanced, strategically focused franchise that has attained stronger revenues and executed on key goals. The rebound in Fixed Income & Commodities sales and trading indicates that clients have re-engaged after the uncertainty of the rating review in the previous quarter. We are beginning to unlock the full potential of the Global Wealth Management franchise, having increased our ownership of, and agreed on a purchase price for the rest of, Morgan Stanley Wealth Management. I am confident in our potential to enhance profitability and increase value for our shareholders in the quarters ahead.”

Key Stats:

The company has fallen short of estimates for two consecutive quarters. In the second quarter, it missed expectations by 27 cents with net income of 16 cents versus a mean estimate of net income of 43 cents per share.

Last quarter, the company reported a net loss that marked a turn from the previous quarter’s profit. In the first quarter, the company booked a profit of $94 million, or 6 cents per share.

Looking Forward: Over the past sixty days, the outlook for the company’s performance next quarter has become increasingly unfavorable. The average estimate for the fourth quarter is 41 cents per share, a drop from 51 cents. The average estimate for the fiscal year is $1.27 per share, down from $1.56 ninety days ago.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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