What's In Store For Morgan Stanley's Third Quarter?

Morgan Stanley’s third quarter earnings report is coming, with the investment bank expected to report on October 15. So what can we expect from Morgan Stanley, which is one of the worst performing big banks in 2019, up just 2.4% since the start of the year, versus gains of 16.2% for rival JPMorgan and 18.3% for Goldman Sachs, not to mention the S&P 500 gain of 17.2%.

To be sure it hasn’t been an easy year in general for the financial industry, with global growth slowing, and central banks all across the world cutting interest rates. Morgan Stanley in particular has been struggling with revenue declines from its key equities trading business, despite equities performing fairly well for most of the year.

Morgan Stanley has long been the leader on Wall Street in equities trading, and with that being the case investors will certainly be looking for signs that the bank is at least beginning to turn things around and improve its recent performance.

They will also be looking for signs that management efforts to diversify the business to perform well in any market environment have been bearing fruit. Part of that plan has meant scaling back on equity trading and focusing more on businesses that generate fees, such as wealth management.

Average analyst estimates for the third quarter is for earnings of $1.15 a share, which is 1% below the same quarter last year. It would also be 5% below the second quarter results. One potential positive is that the bank has beaten estimates in the past two quarters.