Morgan Stanley Better-Than-Expected Results

Morgan Stanley (MS) reported its second-quarter earnings while shares climbed in the market. Figures were well above analyst´s estimates, led by an increase in the fee for trading and brokerage services.

Net revenues reached $9.74 billion beating expectations of $9.1 billion and posted earnings of $1.81 billion or $0.85 per share, or $0.79 per share on an adjusted basis, beating the analyst´s estimate by $0.05 cents, according to Thomson Reuters. “We delivered a strong quarter across each of our businesses," Morgan Stanley CEO James Gorman said in a statement.Excluding a one-time tax benefit received in the same quarter a year ago, Morgan Stanley achieved growth in all of its core businesses.Equities revenues rose to $2.34 billion, trading revenue was up 32% to $3.5 billion from $2.65 billion while fixed income and commodities revenues rose to $1.3 billion from $1 billion.

In fact, these numbers do not surprise me because in the first quarter, the bank also had a very good quarter. In that quarter, revenues rose to $9.91 billion, or $9.78 billion excluding accounting adjustments beating expectations of $9.17 billion. The bank posted a profit of $2.39 billion, higher than the $1.51 billion in the same period of 2014, as well as earnings per share had beaten analyst’s expectations ($1.14 vs $0.78).

In terms of valuation, the stock sells at a trailing P/E of 19.82x, trading at a slightly premium compared to a median of 19.2x for the industry. To use another metric, its price-to-book ratio of 1.19x also indicates a slightly premium versus the industry median of 1.2x while the price-to-sales ratio of 2.25x is below the industry average of 3.67x. In my opinion, these ratios indicate that the stock is relatively undervalued, so it would be appropriate a buy recommendation.

Hedge fund guru Ken Griffin was bearish on Morgan Stanley during the second quarter, trimming his stake in the bank to 349,865 shares.

Fifth Third Bancorp Profits Down

Fifth Third (FITB) posted earnings per share of $0.36 compared to $0.49 in the same quarter one year before. Excluding one-time items, earnings per share would have been $0.43.

Revenues declined more than 1% to $1.45 billion from $1.64billion when compared to the same quarter of 2014. Further, it has missed analyst´s estimates of $1.47 billion.

Net income raised $292 million declining by 26.5% to $0.36 per diluted share from $0.49 per diluted share in the second quarter a year ago.

Manning & Napier Advisors, Inc initiated a new position in the stock in the second quarter with 77,095 shares.

Hedge Funds Bullish in Q2

Wells Fargo (WFC) reported increased in earnings by almost 2% to $1.03 per share in second quarter from $1.01 per share in the same quarter a year ago, but missed estimates by a penny.

Manning & Napier Advisors, Inc increased the position by 719.68% to 421,236 shares, while Ken Fisher boosted his stake by 0.9% to 18,703,566 shares.

On the other hand, one bank that has reported good results was JPMorgan (JPM), with earnings of $1.54 per share beating estimates of $1.44.

Manning & Napier Advisors, Inc increased its position by 942.65% to 278,804 shares, while Ken Fisher increased his stake by 1.2% to 13,741,257 shares.