Morgan Stanley (NYSE: MS) and E*TRADE Financial Corporation (NASDAQ:ETFC) are both large-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, risk, earnings, dividends, analyst recommendations, institutional ownership and valuation.
This table compares Morgan Stanley and E*TRADE Financial Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|E*TRADE Financial Corporation||28.42%||9.06%||1.03%|
Morgan Stanley pays an annual dividend of $1.00 per share and has a dividend yield of 2.3%. E*TRADE Financial Corporation does not pay a dividend. Morgan Stanley pays out 28.7% of its earnings in the form of a dividend. Morgan Stanley has increased its dividend for 3 consecutive years.
Insider and Institutional Ownership
85.2% of Morgan Stanley shares are owned by institutional investors. Comparatively, 92.7% of E*TRADE Financial Corporation shares are owned by institutional investors. 0.2% of Morgan Stanley shares are owned by insiders. Comparatively, 0.2% of E*TRADE Financial Corporation shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
This is a breakdown of recent ratings and target prices for Morgan Stanley and E*TRADE Financial Corporation, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|E*TRADE Financial Corporation||0||5||12||0||2.71|
Morgan Stanley presently has a consensus price target of $48.89, suggesting a potential upside of 11.10%. E*TRADE Financial Corporation has a consensus price target of $42.13, suggesting a potential upside of 6.24%. Given Morgan Stanley’s higher possible upside, research analysts plainly believe Morgan Stanley is more favorable than E*TRADE Financial Corporation.
Earnings & Valuation
This table compares Morgan Stanley and E*TRADE Financial Corporation’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Morgan Stanley||$37.18 billion||2.17||$6.41 billion||$3.49||12.61|
|E*TRADE Financial Corporation||$2.32 billion||4.71||$592.13 million||$2.15||18.45|
Morgan Stanley has higher revenue and earnings than E*TRADE Financial Corporation. Morgan Stanley is trading at a lower price-to-earnings ratio than E*TRADE Financial Corporation, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
Morgan Stanley has a beta of 1.63, indicating that its stock price is 63% more volatile than the S&P 500. Comparatively, E*TRADE Financial Corporation has a beta of 1.46, indicating that its stock price is 46% more volatile than the S&P 500.
Morgan Stanley beats E*TRADE Financial Corporation on 11 of the 18 factors compared between the two stocks.
About Morgan Stanley
Morgan Stanley is a financial holding company. The Company’s segments include Institutional Securities, Wealth Management and Investment Management. The Company’s Institutional Securities business segment provides investment banking, sales and trading, and other services to corporations, governments, financial institutions and high-to-ultra high net worth clients. The Company’s Wealth Management business segment provides an array of financial services and solutions to individual investors and small-to-medium sized businesses and institutions covering brokerage and investment advisory services, market-making activities in fixed income securities, financial and wealth planning services, annuity and insurance products, credit and other lending products, banking and retirement plan services. The Company’s Investment Management business segment provides a range of investment strategies and products.
About E*TRADE Financial Corporation
E*Trade Financial Corporation is a financial services company. The Company provides online brokerage and related products and services primarily to individual retail investors under the brand E*TRADE Financial. The Company also provides investor-focused banking products, primarily sweep deposits, to retail investors. It provides its services to customers through its digital platforms and network of industry-licensed customer service representatives and Financial Consultants, over the phone and by e-mail. The Company’s brokerage business is organized into three product areas: Trading, Investing, and Corporate Services. The Company’s Trading products deliver automated trade order placement and execution services. The Company’s Investing products help investors build wealth and address their long-term investing needs. The Company’s Corporate Services channel provides stock plan administration services for both public and private companies.
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