Back to top

Analyst Blog

Zacks Equity Research

Morgan Stanley May Increase Buybacks

MS JPM C GS

 ZacksTrade Now

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

In order to further boost shareholders’ value, Morgan Stanley (MS - Analyst Report) is expected to seek an increase in share repurchase authorization when it submits the new capital plan with the Federal Reserve in 2014. As per a report in The Wall Street Journal, the news has been confirmed by internal sources well versed with the matter.

Earlier, in July, Morgan Stanley received the Fed’s approval for share buybacks of up to $500 million through Mar 31, 2014. Subsequently, in third quarter 2013, the company repurchased nearly 4.5 million shares worth $123 million.

The aforementioned buybacks were the first of their kind since the financial crisis. During the financial meltdown Morgan Stanley reduced its quarterly dividend by nearly 81.5% to 5 cents and suspended its share buyback program. The current move therefore reinforces shareholders’ confidence in the stock and depicts Morgan Stanley’s improved capital position as well.

As per the provisions of the Dodd-Frank financial-services law, banks (with consolidated assets of $50 billion or more) are required to submit their capital plans with the Fed for approval every year. Most of the banks including The Goldman Sachs Group, Inc. (GS - Analyst Report), JPMorgan Chase & Co. (JPM - Analyst Report), SunTrust Banks, Inc., Capital One Financial Corp. and Zions Bancorp. have been enhancing shareholders’ value since 2011.

However, given its priority to purchase the remaining stake in its joint venture (JV) with Citigroup Inc. (C - Analyst Report) – Morgan Stanley Wealth Management (MSWM) – the company did not ask for any additional capital deployment. In Jun 2013, the company purchased the remaining 35% stake in MSWM JV, which positively impacted its third-quarter 2013 results.

Morgan Stanley has been generating positive earnings surprise in the trailing four quarters with an average beat of 25.95%. This looks impressive as increased profitability enhances the possibility of dividend hikes in the future, provided the company receives the Fed’s consent for the same.

Morgan Stanley currently carries a Zacks Rank #3 (Hold).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GROUP DXYN 15.84 +7.90%
BOFL HOLDING BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%