Morgan Stanley (NYSE:MS) and JPMorgan Chase & Co. (NYSE:JPM) are both large-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, profitability, valuation, dividends, earnings, institutional ownership and analyst recommendations.
Dividends
Morgan Stanley pays an annual dividend of $1.40 per share and has a dividend yield of 1.9%. JPMorgan Chase & Co. pays an annual dividend of $3.60 per share and has a dividend yield of 2.7%. Morgan Stanley pays out 28.1% of its earnings in the form of a dividend. JPMorgan Chase & Co. pays out 34.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. JPMorgan Chase & Co. has increased its dividend for 1 consecutive years. JPMorgan Chase & Co. is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Earnings & Valuation
This table compares Morgan Stanley and JPMorgan Chase & Co.'s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Morgan Stanley | $53.82 billion | 2.49 | $9.04 billion | $4.98 | 14.89 |
| JPMorgan Chase & Co. | $142.42 billion | 2.86 | $36.43 billion | $10.48 | 12.77 |
JPMorgan Chase & Co. has higher revenue and earnings than Morgan Stanley. JPMorgan Chase & Co. is trading at a lower price-to-earnings ratio than Morgan Stanley, indicating that it is currently the more affordable of the two stocks.
Analyst Recommendations
This is a summary of current ratings for Morgan Stanley and JPMorgan Chase & Co., as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Morgan Stanley | 0 | 8 | 15 | 0 | 2.65 |
| JPMorgan Chase & Co. | 2 | 6 | 17 | 0 | 2.60 |
Morgan Stanley presently has a consensus target price of $64.6667, suggesting a potential downside of 12.77%. JPMorgan Chase & Co. has a consensus target price of $128.9022, suggesting a potential downside of 3.65%. Given JPMorgan Chase & Co.'s higher possible upside, analysts plainly believe JPMorgan Chase & Co. is more favorable than Morgan Stanley.
Profitability
This table compares Morgan Stanley and JPMorgan Chase & Co.'s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Morgan Stanley | 19.16% | 12.33% | 1.02% |
| JPMorgan Chase & Co. | 19.16% | 10.85% | 0.83% |
Volatility & Risk
Morgan Stanley has a beta of 1.59, suggesting that its share price is 59% more volatile than the S&P 500. Comparatively, JPMorgan Chase & Co. has a beta of 1.23, suggesting that its share price is 23% more volatile than the S&P 500.
Insider and Institutional Ownership
76.8% of Morgan Stanley shares are held by institutional investors. Comparatively, 69.0% of JPMorgan Chase & Co. shares are held by institutional investors. 0.3% of Morgan Stanley shares are held by insiders. Comparatively, 0.8% of JPMorgan Chase & Co. shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Summary
JPMorgan Chase & Co. beats Morgan Stanley on 10 of the 16 factors compared between the two stocks.
