Why Morgan Stanley Stock Rocked the Market Today
Key Points
Happily, it beat on both the top and bottom lines.
It did this by improving key fundamentals at double-digit percentage rates.
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Morgan Stanley (NYSE: MS) commemorated this year's Tax Day by releasing its latest set of quarterly results on Wednesday. As it comfortably beat the consensus analyst estimates on both the top and bottom lines, investors were eager to get their hands on the bank's stock, and it closed the day nearly 5% higher. That compared very favorably to the S&P 500 index's 0.8% increase.
Banking on growth
Morgan Stanley's first quarter of this year saw the sprawling company book net revenue of just under $20.6 billion, for a healthy year-over-year gain of 16%. Net income under generally accepted accounting principles (GAAP) also increased robustly, rising 29% to almost $5.6 billion ($3.43 per share).
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On average, analysts tracking Morgan Stanley were modeling $19.7 billion for net revenue, and $3.02 per share for GAAP net income.
Hardly for the first time in its history, Morgan Stanley's overall performance was boosted by its always-considerable presence on the capital markets and its wealth management operations.
With the former, its institutional securities division posted record net revenue of $10.7 billion, thanks in no small part to significant increases in its take equity and fixed-income trading. The latter also notched a new all-time high, at $8.5 billion.
Taking advantage of fine opportunities
If any white-shoe bank of long standing is going to do well in frothy times for capital markets, it's grand old Morgan Stanley. Its two leading business units (out of three) are thriving, and barring a global economic slowdown from the Iran war, they should continue to do so. I'd feel safe putting my money in this stock.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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