Morgan Stanley Earnings Preview: Suffering Or Sailing?

Morgan Stanley Earnings Preview: Suffering Or Sailing?

Morgan Stanley (NYSE:MS) will release its earnings numbers for the three months through September 2013 on Friday before the market opens on Wall Street. Investors in the bank will be looking back at the mediocre results from the other financials in the course of this earnings season, and wondering whether Morgan Stanley can beat the trend.

Morgan Stanley Earnings Preview: Suffering Or Sailing?

Consensus numbers gathered in the weeks leading up to the release of this earnings report indicate that analysts are expecting Morgan Stanley (NYSE:MS) to post earnings of 42 cents per share. Revenue for the third quartet is expected to come in at $7.6 billion. Morgan Stanley earned 28 cents per share on revenue of $5.3 billion in the same three months of 2012.

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Financial problems at Morgan Stanley

In the month leading up to the release of this earnings report, Morgan Stanley (NYSE:MS) shares declined by close to 2%. The bank is suffering from many of the same problems hitting its contemporaries. Rising interest rates in the course of the third quarter hit all of the major banks. Morgan Stanley does not offer mortgages, but it does trade in bonds.

Nervousness over the U.S. debt limit and the government shutdown also hit banks in the United States, though not as handsomely as Taper Talk did. Morgan Stanley is expected to suffer alongside the rest of the banks. Trading income is likely to come in well below expectations in tomorrow’s earnings report.

The investment banking house will likely suffer some in tomorrow’s earnings report, but it’s unclear whether investors will care. They have driven the price of the company’s stock out beyond the bounds set by other banks. The firm’s stock may crumble under weight of expectation at some point, however.

Morgan Stanley performance

Morgan Stanley (NYSE:MS) has had the best year of any big bank in 2013. The company’s stock has increased by close to 50% since January 1, and the firm managed to beat analyst expectations in two of the three earnings reports it made public so far this year.

Investors are, however, pricing a good deal of growth into Morgan Stanley (NYSE:MS) stock, and that is responsible for most of the increase in the company’s stock price. The investment bank earned $1.59 per share in 2012 and is expected to earn $1.95 per share this year.

There are more than interest rate problems in the financial industry, and Morgan Stanley (NYSE:MS) may have to deal with them soon. Regulatory pressures seem to have concentrated on JPMorgan Chase & Co (NYSE:JPM) this summer. Morgan Stanley could be next.

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