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Morgan Stanley (MS) Dips More Than Broader Markets: What You Should Know

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Morgan Stanley (MS - Free Report) closed at $87.28 in the latest trading session, marking a -0.26% move from the prior day. This change lagged the S&P 500's daily loss of 0.19%. Elsewhere, the Dow gained 0.01%, while the tech-heavy Nasdaq lost 0.09%.

Prior to today's trading, shares of the investment bank had gained 2.61% over the past month. This has lagged the Finance sector's gain of 3.08% and the S&P 500's gain of 4.7% in that time.

Morgan Stanley will be looking to display strength as it nears its next earnings release, which is expected to be January 17, 2023. In that report, analysts expect Morgan Stanley to post earnings of $1.43 per share. This would mark a year-over-year decline of 31.25%. Our most recent consensus estimate is calling for quarterly revenue of $12.36 billion, down 14.87% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $6.44 per share and revenue of $53.26 billion. These totals would mark changes of -21.65% and -10.87%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for Morgan Stanley. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.06% lower within the past month. Morgan Stanley is currently a Zacks Rank #3 (Hold).

Looking at its valuation, Morgan Stanley is holding a Forward P/E ratio of 13.58. For comparison, its industry has an average Forward P/E of 14.71, which means Morgan Stanley is trading at a discount to the group.

Also, we should mention that MS has a PEG ratio of 1.7. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Financial - Investment Bank was holding an average PEG ratio of 1.09 at yesterday's closing price.

The Financial - Investment Bank industry is part of the Finance sector. This group has a Zacks Industry Rank of 87, putting it in the top 35% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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