With all major investment and money center banks reporting fourth-quarter earnings, we round up the results to see how the club’s holdings Wells Fargo (WFC) and Morgan Stanley (MS) fared against their competitors. We compared whether we could compete. Investment Banking Morgan Stanley has certainly been positioned within the investment bank, not Goldman Sachs (GS). Both last week he was reported on January 17th. The main driver for this stark contrast is primarily non-interest income. While the former was able to really leverage management efforts to move deeper into wealth and wealth management, the latter struggled to build a product for consumers. Both revenues fell short of expectations. The Dow’s stock fell more than 6% on the day reported, compared to Morgan Stanley, where he rose nearly 6% in EPS and sales. While marking return on average tangible common equity (ROTCE) as a miss, his ROTCE for Morgan Stanley is 13.1%, excluding one-time integration-related charges. It was much more in line with expectations than what we’ve seen from Goldman Sachs, which suggests Morgan Stanley shares are trading at 13x futures against his 9.8x multiple at Goldman Sachs. We believe it shows why we warrant a premium in revenue projections. The focus on diversified fee-based earnings also helps justify its premium compared to where Morgan Stanley stock has historically been valued. That his 5-year average is 10.7 times he is. Executive Summary As noted in our January 17 earnings analysis, Morgan Stanley is running all cylinders at full capacity, delivering strong shareholder returns with a more resilient fee-based revenue stream and a strong capital base. We are in a position to continue to produce. Goldman Sachs, on the other hand, deserves to be in the penalty box. Goldman is up less than 1% annually so far. Morgan Stanley’s stock price is up 13% in 2023. Wells Fargo and Bank of America (BAC) are tied for second place. The net profit margin (NIM) for the former was very impressive, while the latter performed great on his ROTCE. We also want to see strong non-interest income that we feel has gone to BofA. In terms of which stock we prefer based on these numbers, we have to stick to Wells Fargo over Bank of America. Wells Fargo’s efficiency ratio is horrendous and his ROTCE at the bank doesn’t compare to his BofA, but I like NIM. This is the item that drove the surge in net interest income (NII) in the same period last year. There is a lot of room for improvement in both Wells Fargo’s efficiency ratio and ROTCE as management works to address legacy issues, meet the targets set by the regulator and remove the asset cap. is worth noting. But there are opportunities. It’s not something I say lightly because I can’t stand it when someone sees a bad result and shows that it can’t get any worse. In the case of Wells Fargo, we are seeing real improvement in the business, and a remarkable catalyst not found in other companies. JP Morgan was clearly the best in the fourth quarter. As such, it’s trading at a premium to the group on both its tangible book value (TBV) and earnings projections for 2023. Bank of America is his number two, and Wells Fargo is cheaper than either. Citigroup is trading below his TBV, which could be seen as a golden opportunity, but the name has consistently traded at a bargain in recent years. group. We see it as a red flag. Wells Fargo’s ROTCE is unremarkable, but is constrained by asset ceilings and a ballooning expense structure that management is aggressively reducing. On the fourth-quarter conference call, management reiterated its confidence that it can achieve his ROTCE of 15% as it works toward removing asset caps and reducing address costs. Adjusting for the $3.3 billion operating loss related to litigation, regulatory and client remediation issues, as noted in last week’s January 13th earnings analysis, the $1 billion equity security impairment charge, the $353 million $510,000 in severance costs and $510 in expenses. When calculating $1 million in individual tax benefits, the ROTCE is close to 16%. NII has beaten management’s long-term expectations with interest rates, funding balances, composition and pricing, so this is just above our long-term target. As Wells Fargo’s ROTCE rises, we expect the stock multiple to widen to a level more in line with Bank of America. Wells Fargo trades at 9.1 times earnings and BofA at 9.6 times. WFC BAC Year-to-date Mountains Wells Fargo (WFC) Year-to-date performance and Bank of America (BAC) conclusions So hopefully milestones achieved and assets uncapped but WFC I believe is the place to be as far as the four big money center rivals are concerned. (Jim Cramer’s Charitable Trust is Long WFC and MS. See here for a full list of stocks.) As a member of Jim Cramer’s CNBC Investing Club, trade alerts before Jim makes a trade. receive. Jim waits 45 minutes after sending a trade alert before buying or selling shares in his charitable trust portfolio. If Jim talks about his stock on his CNBC TV, he will wait 72 hours after issuing a trade alert before executing the trade. The investment club information above is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duty or obligation exists or is created by your receipt of information provided in connection with The Investment Club. No specific results or benefits are guaranteed.
People walk in front of Wells Fargo Bank on 14th Street in New York City on December 20, 2022.
Michael M. Santiago | Getty Images
Now that all major investment and money center banks have reported fourth quarter earnings, we’ve compiled the results and compared club holdings. wells fargo (WFC) and Morgan Stanley (MS), face your rivals.
