Morgan Stanley's Long-Term Financial Targets Make the Stock a Buy
Morgan Stanley (NYSE: MS) had a phenomenal year in 2021, with its stock price rising about 43%. The investment bank and wealth manager achieved its internal guidance, and in many cases exceeded it. Morgan Stanley also closed on its acquisitions of E*Trade and Eaton Vance around the beginning of the year and further integrated them into the company, executing its strategy of building a business that generates more durable and sustainable earnings.
But even after such a strong year, I still see Morgan Stanley as a compelling investment right now because it's guiding for some of the best -- if not the best -- returns among its peers on a more long-term, sustainable basis. Let's take a look.
Investors tend to judge a bank's performance based on the earnings it can generate on the capital it raises from shareholders. For banks, investors also tend to strip out intangible assets, goodwill, and preferred stock in order to get a better idea of the returns. All this is expressed in a metric known as return on tangible common equity (ROTCE). In 2021, Morgan Stanley achieved a 20% ROTCE after setting a target range between 14% and 16%.
Source Fool.com
