Morgan Stanley Beats Earnings Estimates And The Stock Is Climbing
Morgan Stanley reported EPS (ex-DVA) of 50 cents beating analyst estimates of 40 cents, according to data compiled by Bloomberg.
Third quarter adjusted revenue came in at $8.1 billion also beating estimates of $7.659 billion.
"Our results point to the increased consistency, strength and balance we are deriving from our business model," James Gorman said in the release.
"Our strategy to combine a world class investment bank with the stability of the largest U.S. wealth management franchise and strong investment management is enabling us to deliver exceptional advice and execution for our clients as well as stronger returns for our shareholders. Overall, our stronger year-over-year revenues and net income reflect the progress we have made to position the Firm well for the future," he added.
Shares of Morgan Stanley are trading up more than 4% in the pre-market ahead of the earnings release.
Here's an excerpt from the release:
- Net Revenues of $7.9 Billion and Earnings per Diluted Share from Continuing Operations of $0.44
- Excluding DVA,1 Net Revenues were $8.1 Billion and Earnings per Diluted Share from Continuing Operations of $0.502,3
- Continued Strength in Equity Sales & Trading; Investment Banking Top Three Performance in Global Completed M&A and Global IPOs;4 Wealth Management Pre-Tax Margin of 19%;5 Strong Results in Investment Management
Morgan Stanley (NYSE:MS) today reported net revenues of $7.9 billion for the third quarter ended September 30, 2013 compared with $5.3 billion a year ago. For the current quarter, income from continuing operations applicable to Morgan Stanley was $888 million, or $0.44 per diluted share,6 compared with a loss of $1.0 billion, or a loss of $0.55 per diluted share,6 for the same period a year ago.
Results for the current quarter included negative revenue related to changes in Morgan Stanley's debt-related credit spreads and other credit factors (Debt Valuation Adjustment, DVA)1 of $171 million, compared with $2.3 billion a year ago.
Excluding DVA, net revenues for the current quarter were $8.1 billion compared with $7.5 billion a year ago and income from continuing operations applicable to Morgan Stanley was $1.0 billion, or $0.50 per diluted share, compared with income of $560 million, or $0.28 per diluted share, a year ago.3,7
Compensation expense of $4.0 billion was relatively unchanged from a year ago. Non-compensation expenses of $2.6 billion decreased from $2.8 billion in the prior year primarily due to the absence of non-recurring Wealth Management integration expenses in the prior year quarter.
For the current quarter, net income applicable to Morgan Stanley, including discontinued operations, was $0.45 per diluted share, compared with a loss of $0.55 per diluted share in the third quarter of 2012.6
Business Overview
- Institutional Securities net revenues excluding DVA8 were $3.9 billion reflecting strong performance in Equity sales and trading, solid results in Investment Banking and lower results in Fixed Income & Commodities sales and trading.
- Wealth Management net revenues were $3.5 billion and pre-tax margin was 19%.5 Fee based asset flows for the quarter were $15.0 billion and total client assets were $1.8 trillion at quarter end.
- Investment Management reported net revenues of $828 million with assets under management or supervision of $360 billion.