It has been about a month since the last earnings report for Morgan Stanley (MS Quick QuoteMS - Free Report) . Shares have added about 3.9% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Morgan Stanley due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Morgan Stanley Q3 Earnings Beat Estimates on Equity Trading and Wealth Growth

Morgan Stanley’s third-quarter 2026 earnings of $3.03 per share topped the Zacks Consensus Estimate of $2.83. The bottom line rose 8.2% from the year-ago quarter. 

Net income applicable to the company increased 6.5% to $4.91 billion.

Net revenues rose 11.6% year over year to $20.34 billion, surpassing the consensus estimate of $19.74 billion. 

Total non-interest revenues increased 8.6% year over year to $17.09 billion. Trading revenues climbed 11.6% to $5.60 billion, while consolidated IB revenues grew 4.2% to $2.36 billion. Commissions and fees increased to $1.67 billion from $1.47 billion. Net interest income (NII) surged 30.5% to $3.25 billion.

Costs Rise With Business Activity

Total non-interest expenses increased 12.4% year over year to $13.71 billion. Compensation and benefits costs climbed 7.5% to $8 billion, reflecting higher revenues across the business.

Non-compensation expenses rose 20.2% to $5.72 billion. Brokerage, clearing and exchange fees increased 28.6% to $1.47 billion, while information processing and communications costs jumped 16.4% to $1.3 billion. 

The expense efficiency ratio was 67%, unchanged from the prior-year quarter, while the firmwide pre-tax margin declined to 32% from 33%.

Institutional Securities Gains From Equity Activity

Institutional Securities net revenues increased 17.7% year over year to $10.03 billion. Equity revenues surged 40.9% to $5.8 billion on robust client engagement across businesses and regions, particularly in Asia. Advisory revenues climbed 29.7% to $887 million, reflecting increased completed merger and acquisition activity in the Americas.

The gains were partly offset by a 7.3% decline in fixed-income revenues to $2.01 billion, stemming from weaker credit and commodities performance. Equity underwriting revenues fell 19.5% to $525 million, while fixed-income underwriting revenues declined 3.2% to $747 million. 

Segment pre-tax income improved 9.1% to $3.47 billion, although the pre-tax margin narrowed to 35% from 37%.

Wealth Business Hits Revenue Record

Wealth Management net revenues rose 10.1% year over year to a record $9.07 billion. Asset management revenues jumped 15.8% to $5.54 billion on higher market levels and accumulated fee-based flows. NII increased 11.9% to $2.23 billion, benefiting from lending growth and higher average sweep deposits.

As of Sept. 30, 2026, total client assets reached $8.43 trillion, up 19.5% year over year. Fee-based client assets grew to $3.16 trillion, while fee-based flows surged to $80.5 billion from $41.9 billion. 

The segment generated record pre-tax income of $2.75 billion and a pre-tax margin of 30.4%.

Investment Management Faces Performance Fee Pressure

Investment Management net revenues declined 11.6% year over year to $1.46 billion. Asset management and related fees increased 2% to $1.57 billion, aided by higher average assets under management. However, performance-based income and other revenues swung to a loss of $106 million from income of $117 million, reflecting a reversal of accrued carried interest tied primarily to investments in a private fund.

Assets under management or supervision rose 13.2% to $2.05 trillion as of Sept. 30, 2026. Long-term net inflows totaled $15.8 billion, with positive fixed-income and alternatives flows partly offset by equity outflows.

Segment pre-tax income fell 28.8% to $259 million.

Share Repurchase Update

Morgan Stanley repurchased $1.54 billion of common stock during the quarter.

2026 Outlook

The company expects a modest sequential gain in the WM segment’s NII for the fourth quarter. Given the incremental loan growth expectation and deposit mix, NII is projected to continue to trend higher.

For the fourth quarter, the tax rate is expected to be slightly above the third-quarter level, while for full-year 2026, the effective tax rate is expected to be 22-23%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a upward trend in estimates revision.

VGM Scores

Currently, Morgan Stanley has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, the stock was allocated a score of D on the value side, putting it in the bottom 40% for value investors.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Morgan Stanley has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Morgan Stanley belongs to the Zacks Financial - Investment Bank industry. Another stock from the same industry, Goldman Sachs (GS Quick QuoteGS - Free Report) , has gained 2.5% over the past month. More than a month has passed since the company reported results for the quarter ended September 2026.

Goldman reported revenues of $18.68 billion in the last reported quarter, representing a year-over-year change of +23%. EPS of $17.01 for the same period compares with $12.25 a year ago.

Goldman is expected to post earnings of $15.55 per share for the current quarter, representing a year-over-year change of +11%. Over the last 30 days, the Zacks Consensus Estimate has changed +4.3%.

Goldman has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.