Displaying items by tag: earnings
Morgan Stanley’s Wealth Unit is Printing Money
(New York)
Morgan Stanley’s wealth management can be described as nothing other than an unmitigated success in the fourth quarter. The numbers are in, and the data show that the unit is minting cash as the broker enjoys the transition from commission-based to fee-based accounts as provided by the fiduciary rule. Revenue increased a whopping 10% and the profit margin rose from under 10% the previous year to an eye-watering 26% in 2017.
FINSUM: We realize the importance of fiduciary duty, but how is a transition to much more expensive fee-based accounts—which are hugely boosting net profits to big firms—in the ultimate best interest of clients?
The Best Banks to Buy Before Earnings
(New York)
Banks are soon to be reporting their fourth quarter earnings, and Barron’s has put out an article advising investors on which stocks to buy ahead of the release. JPMorgan will report first and its numbers will have big implications for the sector. The piece cites analysts and says that Wells Fargo, Zion’s Bank, and Suntrust Bank look likely to do well, while investors should be underweight Goldman Sachs, CIT Group, and US Bancorp.
FINSUM: The tax package is going to be an interesting part of bank earnings both this earnings season and next, as some banks may do unusual tax maneuvers.
Be Careful, Earnings are About to Plunge
(New York)
Consider this a warning shot across the bow on a piece of information that no one seems to see coming. The Wall Street Journal has put out a piece saying that fourth quarter earnings season, set to start soon, is going to be miserable. The reason why is that many companies are going to intentionally incur some huge expenses as occurring in the fourth quarter as a way to take best advantage of the new tax regime being brought in during 2018. This will heavily cut into fourth quarter profits, leaving some very ugly numbers.
FINSUM: The piece says this is going to be the weirdest earnings season in years, and that seems right as these losses are somewhat artificial. However, it is never good to have some very poor numbers come out, which could lead to some short-term misunderstandings and volatility.