Will Morgan Stanley (MS) Stock Be Helped by Wealth Management Profit Plan?

Morgan Stanley (MS) is planning to offer savings accounts and certificates of deposits beginning next year in an attempt to gain more profits from its wealth management clients.
By Amanda Schiavo ,

NEW YORK (TheStreet) --Morgan Stanley (MS) - Get Report is planning to offer savings accounts and certificates of deposits beginning next year in an attempt to gain more profits from its wealth management clients, sources told Reuters.

The firm is looking to win more assets that keep customers coming back. As of now only 1% of Morgan Stanley's 3.5 million wealth management clients are actively using its retail banking services, Reuters added.

Morgan Stanley will not be building retail banking branches but will instead rely on its brokers to sell the services.

It is likely the plan will also boost the firm's bottom line, Reuters noted. Clients that are actively using Morgan Stanley's banking products typically hold an average of 7% more assets at the firm than those who don't.

Annual fees that customers pay are usually based on a percentage of the client's assets at the firm, Reuters said.

Shares of Morgan Stanley closed lower by 0.62% to $35.02 on Wednesday afternoon. 

Separately, TheStreet Ratings team rates MORGAN STANLEY as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

We rate MORGAN STANLEY (MS) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strongest point has been its very decent return on equity which we feel should persist. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • MORGAN STANLEY's earnings per share declined by 42.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MORGAN STANLEY increased its bottom line by earning $1.58 versus $1.38 in the prior year. This year, the market expects an improvement in earnings ($2.58 versus $1.58).
  • MS, with its decline in revenue, slightly underperformed the industry average of 6.3%. Since the same quarter one year prior, revenues fell by 10.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Capital Markets industry and the overall market, MORGAN STANLEY's return on equity is below that of both the industry average and the S&P 500.
  • The gross profit margin for MORGAN STANLEY is currently lower than what is desirable, coming in at 29.84%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 12.02% trails that of the industry average.
  • Net operating cash flow has significantly decreased to $490.00 million or 73.72% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • You can view the full analysis from the report here: MS

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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