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Favorable quarterly results from the big U.S. banks sparked the Q4 earnings season off to a good start this week, and were complemented by very strong reports from the top investment management firms.
Goldman Sachs (GS - Free Report) and Morgan Stanley (MS - Free Report) stood out in particular, delivering the most impressive bottom-line performance, while BlackRock (BLK - Free Report) continued to dominate in regard to investment assets.
Goldman & Morgan Stanley’s Net Income Growth
Thanks to a sharp rebound in its trading and investment banking services, Goldman delivered the highest Q4 net income of $4.62 billion (+12% year over year) or adjusted EPS of $14.01, which increased 17% YoY and crushed expectations of $11.77 per share by 19%.
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Attributed to strong wealth management margins, Morgan Stanley’s Q4 net income came in at $4.4 billion (+19% YoY) or $2.68 per share, a 21% increase from the prior year quarter and topping estimates of $2.41 by 11%.
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BlackRock’s Q4 EPS increased 10% to $13.16 and beat estimates of $12.39 by 6%, although it's noteworthy that net income actually fell 32% to $1.13 billion, attributed to higher expenses.
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Investment Assets Comparison
BlackRock's Q4 inflows were $342 billion, which increased its assets under management (AUM) by 21% YoY to a record $14.04 trillion.
Morgan Stanley reported that its net new assets were $122 billion, with its total client assets (TCA) increasing 26% to a peak of $9.3 trillion.
Goldman reported that its assets under supervision (AUS) increased by $469 billion, a 15% increase to a record $3.61 trillion.
Performance, Valuation, & Dividend Comparison
Trading near their all-time highs, Goldman and Morgan Stanleystocks have pleasantly outperformed the broader market over the last year, rising 53% and 39% respectively. Meanwhile, BlackRock shares are up a respectable 17% in the last year but are down 4% after hitting an all-time high in October.
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Goldman and Morgan Stanley stocks are slightly more attractive in terms of P/E valuation, offering a sharper discount to the benchmark S&P 500 at under 19X forward earnings, with BlackRock shares at 21X.
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Morgan Stanley’s dividend has the edge with a 2.09% annual yield, followed by BlackRock’s 1.8%, with Goldman’s at 1.64%.
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Conclusion & Final Thoughts
Outside of its more attractive stock price of under $200, Morgan Stanley stock is at the top or has the advantage in more areas than Goldman and BlackRock right now, which both trade over $900 a share.
Notably, the trend of EPS revisions for FY26 and FY27 has also been more favorable for Morgan Stanley stock, which sports a Zacks Rank #2 (Buy), with Goldman and BlackRock shares landing a Zacks Rank #3 (Hold) at the moment.
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