|
|
|
|
|||||
|
|
|
It has been about a month since the last earnings report for Morgan Stanley (MS). Shares have added about 3.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Morgan Stanley due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important drivers.
Morgan Stanley’s third-quarter 2025 earnings of $2.80 per share handily surpassed the Zacks Consensus Estimate of $2.08. Also, the bottom line soared 49% from the prior-year quarter.
Like its Wall Street peers, Morgan Stanley’s investment banking business gained from a frenzy of deal-making activities and IPOs. Advisory fees jumped 25% year over year as completed M&A transactions rose.
Further, higher non-investment grade and investment grade issuances supported the company’s fixed income underwriting fees, which surged 39%. Moreover, equity underwriting income soared 80% “as clients actively engaged in capital-raising opportunities.” Hence, total IB fees (in the Institutional Securities division) increased 44% to $2.11 billion. We had projected it to be $1.54 billion.
Similarly, Morgan Stanley posted a solid trading performance. Equity trading revenues climbed 35% year over year to $4.12 billion and fixed-income trading income was up 8% to $2.17 billion. Our projections for equity and fixed-income trading revenues were $3.56 billion and $2.11 billion, respectively.
The performance of the company’s wealth management and investment management businesses was impressive, driven by a rise in client assets and assets under management. Morgan Stanley’s net interest income increased, given the improved lending activities. On the other hand, an increase in total non-interest expenses was the undermining factor.
Net income applicable to common shareholders was $4.45 billion, an increase of 47% from the year-ago quarter. Our estimate for the metric was $3.12 billion.
Quarterly net revenues were $18.22 billion, surging 18% from the prior-year quarter. The top line handily beat the Zacks Consensus Estimate of $16.4 billion.
NII was $2.49 billion, up 13%. We had projected NII of $2.31 billion.
Total non-interest revenues of $15.73 billion jumped 19%. Our estimate for the metric was $13.56 billion.
Total non-interest expenses were $12.2 billion, up 10%. Our estimate for the metric was $11.44 billion.
Provision for credit losses was nil compared with $79 million in the prior-year quarter. We had projected the metric to be $85.3 million.
Institutional Securities: Pre-tax income was $3.18 billion, jumping 67% from the prior-year quarter. Our estimate for the same was $2.25 billion.
Net revenues were $8.52 billion, up 25% year over year. The upside resulted from increased equity and fixed income trading revenues and higher IB net revenues. We had projected segment net revenues of $7.44 billion.
Wealth Management: Pre-tax income totaled $2.5 billion, rising 21% year over year. Our estimate for the metric was $1.87 billion.
Net revenues were $8.23 billion, up 13%, driven by higher asset management revenues, transactional revenues and NII. We had projected revenues of $7.14 billion.
Total client assets were $7.05 trillion as of Sept. 30, 2025, up 18% year over year. We had projected the metric to be $6.4 trillion.
Investment Management: Pre-tax income was $364 million, climbing 40% from the year-ago quarter. Our estimate for the same was $243.2 million.
Net revenues were $1.65 billion, growing 13%. The improvement was attributable to a rise in asset management and related fees, and performance-based income and other revenues. We had projected revenues of $1.46 billion.
As of Sept. 30, 2025, total assets under management or supervision were $1.81 trillion, up 13% year over year. Our estimate for the metric was $1.75 trillion.
As of Sept. 30, 2025, book value per share was $62.98, up from $58.25 in the corresponding period of 2024. The tangible book value per share was $48.64, up from $43.76 as of Sept. 30, 2024.
Morgan Stanley’s Tier 1 capital ratio (advanced approach) was 17.6% compared with 16.9% in the year-ago quarter. The common equity Tier 1 capital ratio was 15.7% compared with 14.9% a year ago.
In the reported quarter, Morgan Stanley repurchased 7 billion shares for $1.1 billion.
The company expects a modest sequential gain in NII for the fourth quarter of 2025.
It anticipates the effective tax rate to be 24% for the fourth quarter.
In the past month, investors have witnessed a upward trend in estimates review.
The consensus estimate has shifted 8.99% due to these changes.
At this time, Morgan Stanley has a poor Growth Score of F, a score with the same score on the momentum front. Following the exact same course, the stock has a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Morgan Stanley has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Morgan Stanley is part of the Zacks Financial - Investment Bank industry. Over the past month, Wells Fargo (WFC), a stock from the same industry, has gained 0.8%. The company reported its results for the quarter ended September 2025 more than a month ago.
Wells Fargo reported revenues of $21.44 billion in the last reported quarter, representing a year-over-year change of +5.3%. EPS of $1.73 for the same period compares with $1.52 a year ago.
Wells Fargo is expected to post earnings of $1.66 per share for the current quarter, representing a year-over-year change of +16.9%. Over the last 30 days, the Zacks Consensus Estimate has changed +1.7%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Wells Fargo. Also, the stock has a VGM Score of F.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
This article originally published on Zacks Investment Research (zacks.com).
| 1 hour | |
| 2 hours | |
| 3 hours | |
| 4 hours | |
| 4 hours | |
| 6 hours | |
| 6 hours | |
| 7 hours | |
| 9 hours | |
| 10 hours | |
| 10 hours | |
| 10 hours | |
| 11 hours | |
| 18 hours | |
| Nov-13 |
Join thousands of traders who make more informed decisions with our premium features. Real-time quotes, advanced visualizations, backtesting, and much more.
Learn more about FINVIZ*Elite