Morgan Stanley's Hold Recommendation Supported

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

NEW YORK ( TheStreet) -- Morgan Stanley (NYSE: MS) has been reiterated by TheStreet Ratings as a hold with a ratings score of C. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and increase in net income. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • MS's revenue growth has slightly outpaced the industry average of 12.5%. Since the same quarter one year prior, revenues rose by 15.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Capital Markets industry average. The net income increased by 65.8% when compared to the same quarter one year prior, rising from $591.00 million to $980.00 million.
  • MORGAN STANLEY reported significant earnings per share improvement 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 reported lower earnings of $0.00 versus $1.16 in the prior year. This year, the market expects an increase in earnings to $2.10 from $0.00.
  • The gross profit margin for MORGAN STANLEY is currently lower than what is desirable, coming in at 34.03%. Regardless of MS's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 10.08% trails the industry average.
  • 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. 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, a financial holding company, provides various financial products and services to corporations, governments, financial institutions, and individuals worldwide. Morgan Stanley has a market cap of $55.1 billion and is part of the financial sector and financial services industry. Shares are up 50.3% year to date as of the close of trading on Monday.

You can view the full Morgan Stanley Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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