Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model
NEW YORK (
) has been downgraded by TheStreet Ratings from buy to hold. The company's strongest point has been its very decent return on equity which we feel should persist. At the same time, however, we also find weaknesses including feeble growth in the company's earnings per share and deteriorating net income.
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Highlights from the ratings report include:
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- The revenue fell significantly faster than the industry average of 6.9%. Since the same quarter one year prior, revenues fell by 40.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, MORGAN STANLEY underperformed against that of the industry average and is significantly less than that of the S&P 500.
- MORGAN STANLEY has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, MORGAN STANLEY reported lower earnings of $1.16 versus $2.33 in the prior year. For the next year, the market is expecting a contraction of 23.7% in earnings ($0.89 versus $1.16).
- 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 146.5% when compared to the same quarter one year ago, falling from $2,199.00 million to -$1,023.00 million.
Morgan Stanley, a financial holding company, provides various financial products and services to corporations, governments, financial institutions, and individuals worldwide. The company has a P/E ratio of 13.9, below the average financial services industry P/E ratio of 15.9 and below the S&P 500 P/E ratio of 17.7. Morgan Stanley has a market cap of $36.53 billion and is part of the financial sector and financial services industry. Shares are up 17.6% year to date as of the close of trading on Friday.
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-- Written by a member of TheStreet Ratings Staff
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