Like a puppy chasing its tail, some new investors often pursue “the next big thing,” even if that means buying “history stocks” with no income, let alone profit. Unfortunately, high-risk investments are often unlikely to pay off, and many investors pay a price to learn their lesson.
If, on the other hand, you like businesses that have revenue, and even profits, then you might be interested in Morgan stanley (NYSE: MS). Now, I’m not saying the stock is necessarily undervalued today; but I cannot shake an appreciation of the profitability of the company itself. Conversely, a loss-making company has yet to prove itself with profit, and eventually the sweet milk of external capital can turn sour.
See our latest analysis for Morgan Stanley
How fast is Morgan Stanley increasing its earnings per share?
The market is a short-term voting machine, but a long-term weighing machine, so the stock price eventually follows earnings per share (EPS). This makes the growth of BPA an attractive quality for any business. It’s certainly nice to see that Morgan Stanley has managed to increase its EPS by 24% per year over three years. If the company can support this kind of growth, we expect shareholders to come out ahead.
I like to see revenue growth as an indication that growth is sustainable, and I look for a high profit margin before interest and taxes (EBIT) to indicate a competitive gap (although some low-margin companies also have ditches). Not all Morgan Stanley income this year is income operationsSo keep in mind that the revenue and margin numbers I used might not be the best representation of the underlying business. While we note that Morgan Stanley’s EBIT margins have been stable over the past year, revenues increased 25% to US $ 55 billion. It’s really positive.
In the graph below, you can see how the business has increased its profit and revenue over time. Click on the graph to see the exact numbers.
In investing, as in life, the future matters more than the past. So why not watch this free Morgan Stanley interactive visualization forecast benefits?
Are Morgan Stanley Insiders Aligned With All Shareholders?
Since Morgan Stanley has a market cap of US $ 184 billion, we don’t expect insiders to own a large percentage of stocks. But we are reassured by the fact that they have invested in the company. Indeed, they have invested a sparkling mountain of wealth, currently valued at US $ 455 million. I would find that kind of skin in the game quite encouraging, if I owned any stock, as it would ensure that the executives of the company would also experience my success, or failure, with the action.
Is Morgan Stanley Worth Watching?
For growth investors like myself, Morgan Stanley’s gross earnings growth rate is a beacon overnight. Additionally, the high level of insider ownership impresses me and suggests that I am not the only one enjoying the growth of BPA. Rapid growth and confident insiders should be enough to warrant further research. So the answer is, I think it’s a good stock to follow. Still, you should educate yourself on 4 warning signs we spotted with Morgan Stanley (including 2 which do not suit us too much).
You can invest in any business. But if you’d rather focus on stocks that have demonstrated insider buying, here’s a list of companies that have made insider buying in the past three months.
Please note that the insider trading discussed in this article refers to reportable trades in the relevant jurisdiction.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in the mentioned stocks.
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