Since I first discussed Morgan Stanley (MS) in February, not much has happened with the stock. It has been range bound between $40.50 and $48.00 for most of this year. This article will help to explain why the stock has been stuck in this range, despite improving fundamentals in 2017.
The 2016 results were actually not that great as a whole. The stock market had decent returns last year, interest rates increased and volatility ticked up on several occasions. However, the company's top line revenues actually decreased 1.5%, primarily due to lower investment banking and commission revenues. Net interest income did increase significantly to its highest level ever, but it was not enough to offset the declines in noninterest revenue. Return on assets, equity and common equity all decreased in 2016 from 2015's results. The stock, however, returned over 32% in 2016, despite a meager 0.7% increase in earnings per share and a 5% increase in book value.
