Overview
Morgan Stanley
MS · NYSEQ3 2026Financials · Investment Banking and Wealth Management
Since the Report + 3.2%
Revenue grew 11.6% year over year, EPS beat the estimate by 4.1%; the stock fell 2.8% in its first reaction.
- Net RevenueQ3
- $20.34B
- Estimate $19.95B · 1.9% Beat
- EPSGAAP
- $3.03
- Estimate $2.91 · 4.1% Beat
Verdict
BUYMorgan Stanley beat revenue expectations by 1.9% and EPS by 4.1%; score 72, verdict buy. Equities trading grew 41% and wealth management took in $232 billion of net new assets, but declines in investment management and fixed income pushed the stock 2.8% lower at the close. The number to watch next is whether net new assets stay above $100 billion as the IPO effect fades.
Close on Report DayOct 14
$181.51▼ 2.8%Report-Day Move
- Market Cap(Today)
- ≈ $293 B
- 1Y Return(At Report)
- + 16%
- P/E(At Today's Price · $12.60 · Trailing 12M)
- 14.9
- Net Margin(Trailing 12M)
- 15.6%
Earnings Summary
In 30 Seconds- Net revenue of $20.34 billion beat by 1.9%, and EPS of $3.03 beat by 4.1%.
- Wealth management took in $232.4 billion of net new assets, but more than half was tied to IPOs.
- The stock closed 2.8% lower on declines in investment management and fixed income trading.
The Numbers
Equities Trading
$5.80B
▲ 41% YoY · Fixed Income ▼ 7%
Stock Reaction
−2.8%
Close to Close · Intraday Low −5.5%
Net New Assets (Wealth)
$232.4B
Q3 25 $81.0B · Half From IPOs
Guidance
Company Gives No Guidance
ROTCE 22.6% · 5th Quarter Above 20%
Quarterly Revenue ($ Billion)
18.22
Q3 25 · $18.2 B
17.89
Q4 25 · $17.9 B · QoQ − 1.8%
20.58
Q1 26 · $20.6 B · QoQ + 15.0%
21.35
Q2 26 · $21.3 B · QoQ + 3.7%
20.34
Q3 26 · $20.3 B · QoQ − 4.7% · YoY + 11.6%
- Q3 25
- Q4 25
- Q1 26
- Q2 26
- Q3 26
Q4 2026 Company Guidance
- Long-Term ROTCE Goal20%
Q3 Actual 22.6% · 9M 25.4%2.6 Pts Above Goal ▲
- Wealth Mgmt Margin Goal30%
Q3 Actual 30.4% · 2025 29%0.4 Pts Above Goal ▲
- Efficiency Ratio Goal70%
Ceiling · Q3 67% · 9M 66%3.0 Pts Below Ceiling ▲
- Client Assets Goal10 trillion
Q3 Actual $10.5 Trillion5% Above Goal ▲
- Q4 Effective Tax Rate23.3%
Q3 23.3% · Company: Slightly Above Q3
Segment and KPI Data
Revenue by Segment
- Institutional Securities$10.0 BShare 48.8%▲ 18.0% YoY
Equities trading up 41%
- Wealth Management$9.07 BShare 44.1%▲ 10.0% YoY
Record revenue · Margin 30.4%
- Investment Management$1.46 BShare 7.1%▼ 12.0% YoY
Pre-tax income down 29%
Key Metrics
Equities Trading Revenue
$5.80 B
▲ 41.0% YoYPress Release
Fixed Income Trading Revenue
$2.01 B
▼ 7.0% YoYPress Release
Investment Banking Revenue
$2.16 B
▲ 2.0% YoYPress Release
Advisory Revenue
$887 M
▲ 30.0% YoYPress Release
Net New Assets (Wealth)
$232 B
▲ 187.0% YoYPress Release
Fee-Based Flows
$80.5 B
▲ 92.0% YoYPress Release
Assets Under Management
$2.05 T
▲ 13.0% YoYPress Release
Wealth Management Pre-Tax Margin
30.4%
Press Release
Shares are computed over the segment total: $20.6 B. The segment total differs from consolidated revenue ($20.3 B); the company's eliminations and other lines are not in this table. Source: Press Release.
Metrics come only from the company's own filings; each one names the document it was taken from.
“Morgan Stanley reported another strong quarter with net revenues of $20.3 billion, EPS of $3.03 and a ROTCE of 22.6%. Institutional Securities benefited from global strength, led by our Equity franchise, and Wealth Management reported record revenues and added $232 billion in net new assets and $80 billion in fee-based flows. Across Wealth and Investment Management, total client assets grew to $10.5 trillion.”
- Fifth Straight Quarter Above 20%
- 300 Bps of Excess Capital
- IPO and Workplace Inflows
Summary and Review
Summary
Morgan Stanley reported third-quarter net revenue of $20.34 billion. The market expected $19.95 billion; the gap is 1.9%, so the revenue gate is in line. EPS of $3.03 beat the $2.91 estimate by 4.1%; the earnings gate is open. The company gives no numeric guidance, so the third gate is not counted. One in-line and one open gate map to the lower half of the buy band; score 72.
The stock closed 2.8% lower at $181.51 from a prior close of $186.64. Revenue rose 11.6% from a year ago but fell 4.7% from the prior quarter. Fixed income trading dropped 7% and investment management revenue fell 12%. On the call, management said rates, Middle East tensions and energy prices slowed trading in September. The market did not read this report as a record story; it read it as a peak story.
The quarter is strong, but not every line is growing at the same pace. Wealth management revenue rose 10% to a record $9.07 billion, with a 30.4% pre-tax margin. Return on tangible common equity was 22.6%, above 20% for a fifth straight quarter. The CET1 ratio is 14.9%, and management points to 300 basis points of excess capital. That more than half of net new assets came from IPOs pulls the score toward the bottom of the band.
Full Review
Equities trading carried the quarter.
Institutional Securities revenue rose 18% to $10.03 billion. Equities was the engine. That line rose 41% to $5.80 billion. The gain matches the direction of JPMorgan's 49% rise reported yesterday. Fixed income fell 7% to $2.01 billion. Investment banking revenue rose 2% to $2.16 billion. Inside it, the picture is mixed. Advisory rose 30% to $887 million. Equity underwriting fell 19% to $525 million, and fixed income underwriting fell 3% to $747 million. CFO Sharon Yeshaya said pipelines remain robust and diversified. Management sees AI investment as an advisory and financing opportunity. For how to read earnings-day numbers, see the earnings day guide.
A record in wealth, but watch the source.
Wealth Management revenue rose 10% to $9.07 billion, a segment record. The pre-tax margin was 30.4%. Net new assets were $232.4 billion, versus $81.0 billion a year earlier. That is roughly 2.9 times as much. Fee-based client assets reached $3.16 trillion. These assets earn recurring fees, so they hold up better when markets swing. But more than half of the inflow was tied to IPOs. Fee-based flows rose from $41.9 billion to $80.5 billion, up 92%. Total client assets across wealth and investment management reached $10.5 trillion. That clears the $10 trillion goal management has long talked about. Yeshaya said the firm expects to keep benefiting if the IPO market continues over the next 12 months.
Investment management is the weak link.
Investment Management revenue fell 12% to $1.46 billion. The segment's pre-tax income was $259 million, down 29% from a year ago. The segment margin fell to about 17.7%. Its share of total revenue slipped to 7.2%, from about 9.1% a year ago. Assets under management still rose 13% to $2.05 trillion. Long-term net inflows were $15.8 billion, down 12% from $17.9 billion a year ago. Credit moved slightly. The provision for credit losses was $148 million, versus zero a year ago and $98 million last quarter. That is less than 1% of revenue. Still, the drop in investment management is part of why revenue fell 4.7% from the prior quarter.
Excess capital is strong, buybacks measured.
The standardized CET1 ratio was 14.9%. It was 14.8% last quarter and 15.1% a year ago. CEO Ted Pick stressed capital of 300 basis points above the regulatory requirement. The firm bought back 7 million shares at an average $212.74, for $1.54 billion in total. Today's price is 15% below that average. The quarterly dividend is $1.15. Average diluted shares fell 1.5% in a year to 1.566 billion. Return on tangible common equity was 22.6%, down 0.9 points from 23.5% a year ago. The expense efficiency ratio was flat at 67%. Tangible book value per share is $53.96, and the stock trades at about 3.3 times that. For how buybacks affect a stock, see the share buyback guide.
The threshold that changes the story: $100 billion.
The company gives no revenue or earnings guidance. Yeshaya offered only two signals. The fourth-quarter tax rate will be slightly above the third quarter's. Net interest income is also expected to expand over the next year. So the yardstick has to come from wealth management. Tracking the IPO calendar in the meantime also helps. Keep the rule simple. On January 14, look at net new assets. If the figure stays above $100 billion even as the IPO boost fades, the wealth machine is running on its own power. A pre-tax margin above 30% would confirm it. If net new assets drop below last year's $81 billion, this quarter was the peak. A result between the two thresholds means flows are normalizing; then the margin decides.
Looking Ahead
Strengths and Risks
6 Strengths · 6 RisksStrengths
6- EPS of $3.03 beat the $2.91 estimate by 4.1%.
- Equities trading revenue rose 41% to $5.80 billion.
- Wealth management revenue rose 10% to a record $9.07 billion, with a 30.4% pre-tax margin.
- Net new assets reached $232.4 billion, versus $81.0 billion a year ago.
- Total client assets reached $10.5 trillion, clearing the $10 trillion goal.
- Return on tangible common equity of 22.6% stayed above 20% for a fifth straight quarter.
Risks
6- More than half of net new assets were tied to IPOs, and that flow may not repeat.
- Investment management revenue fell 12% and the segment's pre-tax income dropped 29%.
- Fixed income trading fell 7% and equity underwriting dropped 19%.
- Net revenue fell 4.7% from the prior quarterManagement said trading slowed in September.
- Return on tangible common equity fell 0.9 points in a year to 22.6%.
- The company gives no guidanceFor the fourth quarter it shared only the tax rate and NII direction.
What to Watch
4- January 14, 2027Fourth-quarter earnings; whether net new assets stay above $100 billion.
- November 13, 2026Payment of the $1.15 quarterly dividend.
- Fourth quarter — the pace of the IPO market, which directly drives wealth management flows.
- January 2027Whether management updates its medium-term targets.
Upcoming Earnings
To Understand This