NEW YORK (TheStreet) -- Morgan Stanley (MS) - Get Morgan Stanley (MS) Report shares are up 1.66% to $37.45 on heavy volume trading Wednesday following reports that the company received a $1 billion offer from trading house Castleton Commodities International for its oil trading business, according to the Financial Times.
Morgan Stanley's oil trading business had been a takeover target of Russian state-owned Rosneft (RNFTF) before U.S. sanctions against the country for its role in a border dispute with the Ukraine caused the company to withdraw interest.
The sale of the business would be in line with the Morgan Stanley's plans to shrink its position in the oil sector and follows its announcement a couple of weeks ago that it agreed to spin off its natural gas business to a separate company named Pentagon Energy LLC.
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 strengths can be seen in multiple areas, such as its notable return on equity and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- MORGAN STANLEY has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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 ($2.88 versus $1.58).
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 9.3%. Since the same quarter one year prior, revenues slightly dropped by 4.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength 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.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Capital Markets industry. The net income has significantly decreased by 2040.5% when compared to the same quarter one year ago, falling from $84.00 million to -$1,630.00 million.
- You can view the full analysis from the report here: MS Ratings Report