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Morgan Stanley (MS): Here’s What You Might’ve Missed

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If Goldman Sachs is the bank everyone loves to hate, Morgan Stanley (NYSE:MS) might be the bank everyone loves to ignore.

It was one of the last “pure-play” investment banks left standing at the end of the financial crisis, along with Goldman, but it just doesn’t get the investor attention Goldman does. That might be because, unlike Goldman, Morgan has struggled to find its place in the brave, new — and much reduced — world of post-crash Wall Street.

Thinking about investing in Morgan Stanley (NYSE:MS)? Here are seven things you need to know.

1. Morgan increased its revenue in Q1
For the first quarter of 2013, Morgan reported net revenue of $8.1 billion, for a year-over-year increase of 17.8%. This at a time when revenues at many of the big banks were flat or in decline.

At JPMorgan Chase & Co. (NYSE:JPM), first-quarter revenue was down 4.87%. At Wells Fargo & Co (NYSE:WFC), revenue was down 1.40% for the first quarter. Profit is all well and good — JPMorgan, Wells, and Morgan Stanley (NYSE:MS) all had plenty of it in Q1 — but if it isn’t born out of ongoing revenue growth, then it’s not sustainable.

2. Outstanding year-to-date share-price performance
Year to date, Morgan shareholders have seen an 18.65% gain on their investment. Investor darling Bank of America Corp (NYSE:BAC) has only returned 7.07% in the same time period.

3. Morgan is bigger than you think
We all know that size isn’t everything, but managed properly, it sure can help generate revenue and profit. Morgan Stanley (NYSE:MS) is the country’s sixth biggest bank-holding company, just behind Goldman and ahead of The Bank of New York Mellon Corporation (NYSE:BK) and U.S. Bancorp (NYSE:USB).

For how little press and Foolish investor attention Morgan generates, I’m always struck when I see this statistic.

4. Attractive valuation
Morgan Stanley (NYSE:MS)’s price-to-book ratio, or P/B, is 0.76. That’s on the low side, but not low enough to make me think there’s anything fundamentally wrong with the bank. Rather, it makes me think the bank is a value buy, that’s it’s undervalued by investors.

B of A has a P/B of 0.63. That’s low enough to make me wary. Citigroup Inc. (NYSE:C) has the exact same P/B as Morgan: again, a sign to me the bank is undervalued as an investment, not a ticking time bomb.

5. Morgan pays a small dividend
Here’s a metric maybe worth celebrating, or maybe not. Morgan pays a dividend of only 0.90%. This versus JPMorgan Chase & Co. (NYSE:JPM)’s and Wells Fargo & Co (NYSE:WFC)’s 3.2%. Goldman Sachs pays 1.4%.

Of course, there’s something to be said for being conservative with capital returns. Citi famously withheld a dividend increase just recently, on the heels of a great first quarter and a great 2013 stress test. To me, this was a sign of Citi CEO Michael Corbat’s seriousness about bringing Citi back to full health. Maybe Morgan CEO James Gorman has the same good idea.

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