Intrinsic value of Morgan Stanley - MS

Previous Close

$48.37

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$48.37

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

Our model is not good at valuating stocks of financial companies, such as MS.

We calculate the intrinsic value of MS stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 86.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  9.60
  9.14
  8.73
  8.35
  8.02
  7.72
  7.44
  7.20
  6.98
  6.78
  6.60
  6.44
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
  5.69
  5.62
  5.56
  5.50
  5.45
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
Revenue, $m
  41,588
  45,389
  49,349
  53,472
  57,759
  62,216
  66,848
  71,661
  76,663
  81,862
  87,269
  92,892
  98,743
  104,835
  111,180
  117,792
  124,685
  131,876
  139,381
  147,216
  155,400
  163,952
  172,892
  182,242
  192,022
  202,258
  212,972
  224,190
  235,939
  248,247
Variable operating expenses, $m
  20,245
  20,345
  20,449
  20,557
  20,670
  20,787
  20,909
  21,035
  21,167
  21,304
  2,295
  2,443
  2,597
  2,757
  2,924
  3,097
  3,279
  3,468
  3,665
  3,871
  4,086
  4,311
  4,546
  4,792
  5,049
  5,319
  5,600
  5,895
  6,204
  6,528
Fixed operating expenses, $m
  7,732
  7,903
  8,076
  8,254
  8,436
  8,621
  8,811
  9,005
  9,203
  9,405
  9,612
  9,824
  10,040
  10,261
  10,486
  10,717
  10,953
  11,194
  11,440
  11,692
  11,949
  12,212
  12,481
  12,755
  13,036
  13,323
  13,616
  13,915
  14,221
  14,534
Total operating expenses, $m
  27,977
  28,248
  28,525
  28,811
  29,106
  29,408
  29,720
  30,040
  30,370
  30,709
  11,907
  12,267
  12,637
  13,018
  13,410
  13,814
  14,232
  14,662
  15,105
  15,563
  16,035
  16,523
  17,027
  17,547
  18,085
  18,642
  19,216
  19,810
  20,425
  21,062
Operating income, $m
  13,611
  17,142
  20,824
  24,661
  28,654
  32,808
  37,128
  41,621
  46,293
  51,153
  75,361
  80,625
  86,107
  91,817
  97,770
  103,977
  110,454
  117,214
  124,275
  131,653
  139,364
  147,429
  155,865
  164,694
  173,937
  183,617
  193,756
  204,379
  215,514
  227,185
EBITDA, $m
  145,032
  158,824
  173,199
  188,164
  203,732
  219,917
  236,741
  254,228
  272,404
  291,300
  310,952
  331,396
  352,674
  374,830
  397,911
  421,968
  447,055
  473,228
  500,547
  529,076
  558,882
  590,033
  622,605
  656,674
  692,321
  729,631
  768,694
  809,603
  852,455
  897,354
Interest expense (income), $m
  2,834
  37,397
  37,115
  37,891
  38,700
  39,541
  40,417
  41,327
  42,273
  43,256
  44,277
  45,339
  46,443
  47,591
  48,786
  50,030
  51,325
  52,676
  54,083
  55,552
  57,084
  58,684
  60,355
  62,102
  63,927
  65,836
  67,834
  69,924
  72,111
  74,402
  76,801
Earnings before tax, $m
  -23,786
  -19,973
  -17,066
  -14,039
  -10,888
  -7,609
  -4,199
  -652
  3,038
  6,876
  30,023
  34,183
  38,516
  43,032
  47,740
  52,652
  57,778
  63,131
  68,724
  74,569
  80,680
  87,074
  93,764
  100,767
  108,101
  115,783
  123,832
  132,268
  141,111
  150,384
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  820
  1,857
  8,106
  9,229
  10,399
  11,619
  12,890
  14,216
  15,600
  17,045
  18,555
  20,134
  21,784
  23,510
  25,316
  27,207
  29,187
  31,261
  33,435
  35,712
  38,100
  40,604
Net income, $m
  -23,786
  -19,973
  -17,066
  -14,039
  -10,888
  -7,609
  -4,199
  -652
  2,217
  5,020
  21,917
  24,953
  28,117
  31,413
  34,850
  38,436
  42,178
  46,086
  50,168
  54,435
  58,897
  63,564
  68,448
  73,560
  78,914
  84,522
  90,397
  96,556
  103,011
  109,780

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  174,738
  190,709
  207,351
  224,672
  242,686
  261,412
  280,873
  301,097
  322,114
  343,960
  366,675
  390,301
  414,887
  440,483
  467,142
  494,923
  523,888
  554,102
  585,633
  618,553
  652,940
  688,874
  726,438
  765,721
  806,817
  849,822
  894,839
  941,975
  991,341
  1,043,056
Adjusted assets (=assets-cash), $m
  174,738
  190,709
  207,351
  224,672
  242,686
  261,412
  280,873
  301,097
  322,114
  343,960
  366,675
  390,301
  414,887
  440,483
  467,142
  494,923
  523,888
  554,102
  585,633
  618,553
  652,940
  688,874
  726,438
  765,721
  806,817
  849,822
  894,839
  941,975
  991,341
  1,043,056
Revenue / Adjusted assets
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
Average production assets, $m
  1,122,702
  1,225,317
  1,332,238
  1,443,525
  1,559,268
  1,679,585
  1,804,624
  1,934,560
  2,069,595
  2,209,958
  2,355,902
  2,507,705
  2,665,670
  2,830,122
  3,001,410
  3,179,907
  3,366,008
  3,560,130
  3,762,717
  3,974,234
  4,195,172
  4,426,046
  4,667,398
  4,919,797
  5,183,839
  5,460,149
  5,749,385
  6,052,233
  6,369,415
  6,701,686
Working capital, $m
  -837,577
  -914,131
  -993,898
  -1,076,923
  -1,163,271
  -1,253,032
  -1,346,315
  -1,443,252
  -1,543,993
  -1,648,709
  -1,757,589
  -1,870,839
  -1,988,687
  -2,111,374
  -2,239,161
  -2,372,327
  -2,511,164
  -2,655,987
  -2,807,124
  -2,964,924
  -3,129,751
  -3,301,992
  -3,482,049
  -3,670,348
  -3,867,333
  -4,073,470
  -4,289,251
  -4,515,187
  -4,751,816
  -4,999,702
Total debt, $m
  687,306
  701,680
  716,658
  732,246
  748,459
  765,313
  782,828
  801,029
  819,944
  839,606
  860,049
  881,313
  903,440
  926,476
  950,470
  975,473
  1,001,541
  1,028,734
  1,057,111
  1,086,740
  1,117,688
  1,150,028
  1,183,836
  1,219,191
  1,256,177
  1,294,882
  1,335,397
  1,377,819
  1,422,249
  1,468,793
Total liabilities, $m
  157,264
  171,638
  186,616
  202,204
  218,417
  235,271
  252,786
  270,987
  289,902
  309,564
  330,007
  351,271
  373,398
  396,434
  420,428
  445,431
  471,499
  498,692
  527,069
  556,698
  587,646
  619,986
  653,794
  689,149
  726,135
  764,840
  805,355
  847,777
  892,207
  938,751
Total equity, $m
  17,474
  19,071
  20,735
  22,467
  24,269
  26,141
  28,087
  30,110
  32,211
  34,396
  36,667
  39,030
  41,489
  44,048
  46,714
  49,492
  52,389
  55,410
  58,563
  61,855
  65,294
  68,887
  72,644
  76,572
  80,682
  84,982
  89,484
  94,197
  99,134
  104,306
Total liabilities and equity, $m
  174,738
  190,709
  207,351
  224,671
  242,686
  261,412
  280,873
  301,097
  322,113
  343,960
  366,674
  390,301
  414,887
  440,482
  467,142
  494,923
  523,888
  554,102
  585,632
  618,553
  652,940
  688,873
  726,438
  765,721
  806,817
  849,822
  894,839
  941,974
  991,341
  1,043,057
Debt-to-equity ratio
  39.330
  36.790
  34.560
  32.590
  30.840
  29.280
  27.870
  26.600
  25.460
  24.410
  23.460
  22.580
  21.780
  21.030
  20.350
  19.710
  19.120
  18.570
  18.050
  17.570
  17.120
  16.690
  16.300
  15.920
  15.570
  15.240
  14.920
  14.630
  14.350
  14.080
Adjusted equity ratio
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -23,786
  -19,973
  -17,066
  -14,039
  -10,888
  -7,609
  -4,199
  -652
  2,217
  5,020
  21,917
  24,953
  28,117
  31,413
  34,850
  38,436
  42,178
  46,086
  50,168
  54,435
  58,897
  63,564
  68,448
  73,560
  78,914
  84,522
  90,397
  96,556
  103,011
  109,780
Depreciation, amort., depletion, $m
  131,421
  141,683
  152,375
  163,504
  175,078
  187,110
  199,613
  212,607
  226,111
  240,147
  235,590
  250,771
  266,567
  283,012
  300,141
  317,991
  336,601
  356,013
  376,272
  397,423
  419,517
  442,605
  466,740
  491,980
  518,384
  546,015
  574,938
  605,223
  636,941
  670,169
Funds from operations, $m
  107,635
  121,710
  135,308
  149,465
  164,190
  179,501
  195,415
  211,955
  228,328
  245,167
  257,507
  275,724
  294,684
  314,425
  334,991
  356,427
  378,779
  402,099
  426,440
  451,859
  478,414
  506,168
  535,187
  565,540
  597,298
  630,537
  665,336
  701,779
  739,953
  779,949
Change in working capital, $m
  -73,364
  -76,555
  -79,767
  -83,024
  -86,348
  -89,761
  -93,284
  -96,937
  -100,741
  -104,716
  -108,879
  -113,251
  -117,847
  -122,687
  -127,787
  -133,165
  -138,838
  -144,823
  -151,137
  -157,799
  -164,828
  -172,240
  -180,057
  -188,299
  -196,985
  -206,138
  -215,780
  -225,936
  -236,629
  -247,886
Cash from operations, $m
  180,999
  198,264
  215,076
  232,489
  250,539
  269,261
  288,698
  308,892
  329,069
  349,882
  366,386
  388,975
  412,531
  437,112
  462,779
  489,592
  517,617
  546,921
  577,577
  609,658
  643,241
  678,409
  715,245
  753,838
  794,282
  836,674
  881,116
  927,715
  976,582
  1,027,835
Maintenance CAPEX, $m
  -102,435
  -112,270
  -122,532
  -133,224
  -144,353
  -155,927
  -167,959
  -180,462
  -193,456
  -206,960
  -220,996
  -235,590
  -250,771
  -266,567
  -283,012
  -300,141
  -317,991
  -336,601
  -356,013
  -376,272
  -397,423
  -419,517
  -442,605
  -466,740
  -491,980
  -518,384
  -546,015
  -574,938
  -605,223
  -636,941
New CAPEX, $m
  -98,350
  -102,615
  -106,921
  -111,287
  -115,743
  -120,317
  -125,039
  -129,936
  -135,035
  -140,363
  -145,944
  -151,803
  -157,965
  -164,452
  -171,288
  -178,497
  -186,101
  -194,123
  -202,587
  -211,517
  -220,938
  -230,874
  -241,352
  -252,399
  -264,042
  -276,311
  -289,236
  -302,848
  -317,182
  -332,271
Cash from investing activities, $m
  -200,785
  -214,885
  -229,453
  -244,511
  -260,096
  -276,244
  -292,998
  -310,398
  -328,491
  -347,323
  -366,940
  -387,393
  -408,736
  -431,019
  -454,300
  -478,638
  -504,092
  -530,724
  -558,600
  -587,789
  -618,361
  -650,391
  -683,957
  -719,139
  -756,022
  -794,695
  -835,251
  -877,786
  -922,405
  -969,212
Free cash flow, $m
  -19,786
  -16,621
  -14,377
  -12,022
  -9,557
  -6,982
  -4,299
  -1,506
  578
  2,560
  -553
  1,581
  3,796
  6,093
  8,478
  10,954
  13,525
  16,198
  18,977
  21,869
  24,880
  28,017
  31,288
  34,700
  38,261
  41,980
  45,866
  49,928
  54,177
  58,623
Issuance/(repayment) of debt, $m
  -5,232
  14,374
  14,977
  15,589
  16,213
  16,854
  17,515
  18,201
  18,915
  19,662
  20,443
  21,264
  22,127
  23,036
  23,994
  25,003
  26,068
  27,192
  28,378
  29,629
  30,948
  32,340
  33,808
  35,355
  36,986
  38,705
  40,515
  42,422
  44,430
  46,543
Issuance/(repurchase) of shares, $m
  44,320
  21,570
  18,731
  15,771
  12,689
  9,482
  6,145
  2,674
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  39,088
  35,944
  33,708
  31,360
  28,902
  26,336
  23,660
  20,875
  18,915
  19,662
  20,443
  21,264
  22,127
  23,036
  23,994
  25,003
  26,068
  27,192
  28,378
  29,629
  30,948
  32,340
  33,808
  35,355
  36,986
  38,705
  40,515
  42,422
  44,430
  46,543
Total cash flow (excl. dividends), $m
  19,303
  19,323
  19,330
  19,338
  19,345
  19,353
  19,361
  19,369
  19,493
  22,222
  19,890
  22,845
  25,923
  29,129
  32,472
  35,957
  39,594
  43,390
  47,355
  51,498
  55,829
  60,358
  65,096
  70,055
  75,247
  80,685
  86,381
  92,350
  98,607
  105,166
Retained Cash Flow (-), $m
  -44,320
  -21,570
  -18,731
  -15,771
  -12,689
  -9,482
  -6,145
  -2,674
  -2,102
  -2,185
  -2,271
  -2,363
  -2,459
  -2,560
  -2,666
  -2,778
  -2,896
  -3,021
  -3,153
  -3,292
  -3,439
  -3,593
  -3,756
  -3,928
  -4,110
  -4,301
  -4,502
  -4,714
  -4,937
  -5,171
Prev. year cash balance distribution, $m
  3,060
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  1,025
  1,123
  1,225
  1,332
  1,444
  1,559
  1,680
  1,805
  1,935
  2,070
  2,210
  2,356
  2,508
  2,666
  2,831
  3,002
  3,180
  3,367
  3,561
  3,763
  3,975
  4,196
  4,427
  4,668
  4,921
  5,185
  5,461
  5,750
  6,053
  6,370
Cash available for distribution, $m
  -21,957
  -2,247
  600
  3,567
  6,656
  9,871
  13,216
  16,695
  17,392
  20,037
  17,618
  20,483
  23,464
  26,570
  29,806
  33,179
  36,697
  40,369
  44,202
  48,206
  52,390
  56,764
  61,339
  66,127
  71,137
  76,384
  81,879
  87,637
  93,670
  99,994
Discount rate, %
  15.10
  15.86
  16.65
  17.48
  18.35
  19.27
  20.24
  21.25
  22.31
  23.43
  24.60
  25.83
  27.12
  28.47
  29.90
  31.39
  32.96
  34.61
  36.34
  38.16
  40.06
  42.07
  44.17
  46.38
  48.70
  51.13
  53.69
  56.38
  59.19
  62.15
PV of cash for distribution, $m
  -19,077
  -1,674
  378
  1,872
  2,866
  3,429
  3,638
  3,574
  2,839
  2,442
  1,568
  1,301
  1,037
  796
  589
  421
  289
  192
  122
  75
  44
  25
  14
  7
  4
  2
  1
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  22.4
  11.3
  6.4
  4.1
  2.9
  2.4
  2.2
  2.2
  2.2
  2.2
  2.2
  2.2
  2.2
  2.2
  2.2
  2.2
  2.2
  2.2
  2.2
  2.2
  2.2
  2.2
  2.2
  2.2
  2.2
  2.2
  2.2
  2.2
  2.2

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.

FINANCIAL RATIOS  of  Morgan Stanley (MS)

Valuation Ratios
P/E Ratio 15
Price to Sales 2.4
Price to Book 1.2
Price to Tangible Book
Price to Cash Flow 36.6
Price to Free Cash Flow 76.5
Growth Rates
Sales Growth Rate 0.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -7.1%
Cap. Spend. - 3 Yr. Gr. Rate -0.6%
Financial Strength
Quick Ratio 0
Current Ratio NaN
LT Debt to Equity 231.3%
Total Debt to Equity 509.3%
Interest Coverage 4
Management Effectiveness
Return On Assets 1%
Ret/ On Assets - 3 Yr. Avg. 1%
Return On Total Capital 1.3%
Ret/ On T. Cap. - 3 Yr. Avg. 1.2%
Return On Equity 7.9%
Return On Equity - 3 Yr. Avg. 7.1%
Asset Turnover 0
Profitability Ratios
Gross Margin 80.6%
Gross Margin - 3 Yr. Avg. 80.8%
EBITDA Margin 35.4%
EBITDA Margin - 3 Yr. Avg. 30.2%
Operating Margin 23.3%
Oper. Margin - 3 Yr. Avg. 18.4%
Pre-Tax Margin 23.3%
Pre-Tax Margin - 3 Yr. Avg. 18.4%
Net Profit Margin 15.8%
Net Profit Margin - 3 Yr. Avg. 13.7%
Effective Tax Rate 30.8%
Eff/ Tax Rate - 3 Yr. Avg. 18.1%
Payout Ratio 29.2%

MS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MS stock intrinsic value calculation we used $37945 million for the last fiscal year's total revenue generated by Morgan Stanley. The default revenue input number comes from 2017 income statement of Morgan Stanley. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our MS stock valuation model: a) initial revenue growth rate of 9.6% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 15.1%, whose default value for MS is calculated based on our internal credit rating of Morgan Stanley, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Morgan Stanley.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of MS stock the variable cost ratio is equal to 53.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $7566 million in the base year in the intrinsic value calculation for MS stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Morgan Stanley.

Corporate tax rate of 27% is the nominal tax rate for Morgan Stanley. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the MS stock is equal to 2.7%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for MS are equal to 2699.6%.

Life of production assets of 10 years is the average useful life of capital assets used in Morgan Stanley operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for MS is equal to -2014%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $0 million for Morgan Stanley - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 1780 million for Morgan Stanley is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Morgan Stanley at the current share price and the inputted number of shares is $86.1 billion.

RELATED COMPANIES Price Int.Val. Rating
SCHW Charles Schwab 50.90 14.99  str.sell
EVR Evercore Cl A 109.65 584.65  str.buy
RJF Raymond James 91.43 39.32  str.sell

COMPANY NEWS

▶ US retail sales rose at robust 0.5 pct. annual rate in July   [Aug-15-18 10:45AM  Associated Press]
▶ Southwest would be a good fit for Berkshire Hathaway, analysts say   [Aug-09-18 02:54PM  American City Business Journals]
▶ Former Tinder CEO swipes right on DoorDash's future growth   [Aug-08-18 02:57PM  American City Business Journals]
▶ Former Tinder CEO swipes right on Doordash's future growth   [09:29AM  American City Business Journals]
▶ Morgan Stanley Goes Against the Crowd on JGBs   [Aug-06-18 06:37PM  Bloomberg]
▶ Day Ahead: Top 3 Things to Watch   [Aug-02-18 08:00PM  Investing.com]
▶ Here's How Morgan Stanley's Earnings Grew 49%   [Aug-01-18 03:27PM  Motley Fool]
▶ Apple vs. Amazon: Which Has the Most Upside?   [01:42PM  InvestorPlace]
▶ [$$] Simon, Meet Luma: Banks Battle for Share in Structured Notes   [Jul-31-18 07:44PM  The Wall Street Journal]
▶ [$$] Morgan Stanley's Comp Plan to Boost Tech   [01:34PM  The Wall Street Journal]
▶ [$$] Morgan Stanley Seeks to Manage More of Its Clients Wealth   [Jul-30-18 08:42PM  The Wall Street Journal]
▶ The Top General Motors Shareholders (GM)   [Jul-25-18 09:40AM  Investopedia]
▶ 5 ESG ETFs Outperforming the Broader Market   [Jul-24-18 04:25PM  Zacks]
▶ Post-Protocol World Suits Gorman Fine   [03:22PM  Barrons.com]
▶ How the Trade War Is Moving the Dollar   [09:45AM  Bloomberg Video]
▶ [$$] Morgan Stanley hires new Head of Transformation   [Jul-23-18 10:22PM  Financial Times]
▶ Top 5 Things That Moved Markets This Past Week   [Jul-20-18 08:01PM  Investing.com]
▶ Goldman Sachs, Morgan Stanley Both Claim M&A Deals Crown   [Jul-19-18 09:00AM  Bloomberg Video]
▶ [$$] Morgan Stanley Wraps Up Big-Bank Earnings With 39% Profit Growth   [Jul-18-18 08:01PM  The Wall Street Journal]
▶ [$$] Morgan Stanley Is Worth its Price   [08:00PM  The Wall Street Journal]
▶ [$$] Morgan Stanley's Profit Jumps 39%   [05:39PM  The Wall Street Journal]
▶ [$$] Morgan Stanley's Reboot Complete   [11:01AM  The Wall Street Journal]
▶ Morgan Stanley's profit soars 39 percent   [10:10AM  Reuters Videos]
▶ How Morgan Stanley Makes its Money (MS)   [09:53AM  Investopedia]
▶ Morgan Stanley posts 2Q earnings beat   [07:19AM  Fox Business Videos]
▶ Morgan Stanley Reports Second Quarter 2018   [06:55AM  Business Wire]
▶ The Recent IPO Market 5 Deals to Watch   [Jul-17-18 11:48PM  InvestorPlace]
▶ Day Ahead: Top 3 Things to Watch   [07:37PM  Investing.com]
▶ Morgan Stanley Q2 Earnings Preview   [03:04PM  Benzinga]
▶ Yahoo Finance Live: Midday Movers - Jul 17th, 2018   [09:40AM  Yahoo Finance Video]
Follow us on:   twitter   twitter   twitter   twitter

ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.