Morgan Stanley: Financial Loser

NEW YORK (TheStreet) -- Morgan Stanley (MS) was the loser among the largest U.S. financial names on Wednesday, with pulling back 3% to close at $16.95.

The broad indexes were mixed, after ADP reported that private-sector U.S. employment increased by 119,000 during April, on a seasonally adjusted basis, declining sharply from a revised 201,000 during February.

Economists surveyed by Thomson Reuters had estimated that private-sector payrolls would grow by 170,000 during April.

The KBW Bank Index (I:BKX) decline 1% to close at 48.44, with 17 out of 24 index components seeing declines.

Morgan Stanley's shares have now returned 13% year-to-date, following a 44% decline during 2011.

The shares trade for a low 0.6 times their reported March 31 tangible book value of $27.37, and for seven times the consensus 2013 earnings estimate of $2.42, among analysts polled by Thomson Reuters. The consensus 2012 EPS estimate is $1.43.

Wells Fargo analyst Matthew Burnell rates Morgan Stanley "Market Perform," and said on April 20 following the company's first-quarter earnings announcement, that excluding debit valuation adjustments and employee severance costs, Morgan Stanley generated a first-quarter return on tangible common equity of 11%, "below [Goldman Sachs] (14%) and [JPMorgan Chase's] IB unit," which had an ROE of 17%.

Burnell added that "Q1 results finally pierced double digits, but sustainability remains the question," and that because he believes "MS will be challenged to earn its cost of equity in 2012, MS shares are unlikely to trade meaningfully above TBV in the near term."

Interested in more on Morgan Stanley? See TheStreet Ratings' report card for this stock.

RELATED STORIES:

AIG vs. Bank of America Vie for 2012 Comeback King

Banks Stocks Remain Under Dark Cloud

Genworth Shares Aim Higher As CEO Resigns

MasterCard Profits Jump 25%

Genworth's Down Under for a Reason

Bank of America Keeps Shrinking

-- Written by Philip van Doorn in Jupiter, Fla.

To contact the writer, click here: Philip van Doorn.

To follow the writer on Twitter, go to http://twitter.com/PhilipvanDoorn.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.