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Morgan Stanley Q4 results: shares fall on revenue miss

Morgan Stanley has a disappointing Q4 earnings report.

Morgan Stanley’s revenue is down in its fourth-quarter(Q4) earnings report. The bank is the latest financial institution to have disappointing results.

Morgan Stanley key figures

Earnings Per Share (EPS) $0.80 a share
Revenue $8.5 billion
Earnings Growth - 10 %
Net Income $1.5 billion
Wealth Management $4.1 billion

Morgan Stanley earnings

Morgan Stanley revenue declined 10% to $8.55 billion, as opposed to the $9.3 billion that was forecast by financial analysts. Morgan Stanley’s earnings per share(EPS) was $0.80 a share, less than the $0.89 a share financial experts expected. The bank’s trading section fell the furthest, with $ 3.84 billion, $500 million less than Wall Street wanted the institution to rep. The institution’s wealth management division posted profits of $ 4.14 billion, less than the estimated $4.45 billion. The only Morgan Stanley results that exceeded expectations was in investment management, with revenue of $684 million.

Morgan Stanley’s chief executive officer, (CEO), James Gorman, was positive about Morgan Stanley’s results despite the lackluster earnings report.

‘In 2018 we achieved record revenues and earnings, and growth across each of our business segments — despite a challenging fourth quarter. While the global environment remains uncertain, our franchise is strong, and we are well positioned to pursue growth opportunities and serve our clients,’said Gorman.

Octavio Marenzi, chief executive officer (CEO), of capital markets consultancy firm, Opimas, had a far more pessimistic view of the Morgan Stanley results.

‘This is not Morgan Stanley's finest hour,’said Marenzi. ‘In wealth management, Morgan Stanley's revenues were down 6%, while competing firms were able to eke out single-digit growth. In equities trading, Morgan Stanley was even further behind the competition, with flat revenues where other investment banks were able to benefit from market volatility and show double-digit growth.’

What do Morgan Stanley Q4 results mean for their share price?

Morgan Stanley share price is down to $42.25 after the unsatisfactory earnings report. Morgan Stanley earnings has plummeted by about 6% after the lackluster profits report. The massive selloff is the worst one-day drop since the US financial crisis of 2009.

How do Morgan Stanley results compare to other bank stocks?

Morgan Stanley results are down in comparison to Goldman Sachs, which beat earnings estimates. Morgan Stanley share price is down, similar to other banks, like Wells Fargo and JP Morgan Chase. Bank of America stock is the only US bank stock that ‘s currently rising.

In comparison to other banks, Citigroup had a negative earnings report as well. Only Wells Fargo,Bank of America, and Goldman Sachs have had positive earnings reports and exceeded earnings estimates.

Morgan Stanley results are down similarly to other banks because of the volatility of the US stock market in December 2018. Morgan Stanley share price dropped during that unpredictable time, in addition to the stocks of other financial institutions.

Morgan Stanley’s dividend forecast

Despite the negative revenue report, Morgan Stanley’s dividend forecast is positive. Analysts are predicting that the bank’s revenue will increase by 11.49% over the next five years.

Morgan Stanley underperforms against other bank stocks

In an overall negative earnings season for banks, Morgan Stanley results continue the downward trend of bank stocks. Morgan Stanley’s revenue report shows that the volatility of 2018 is affecting bank stocks in the new year.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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