QS Research · Michael Burry's Scion Capital analyst template · 2006
MORGAN STANLEY (MS)
As of 2026-11-06 · 11/15 boxes filled from SEC filings and market data
Conclusion: SHORT
Conviction medium · base case -41% · downside -52% · upside -29%
The market is paying for TTM earnings that are well above the cycle: TTM net income is $19.85B and EPS $12.70 (N14, N5), while FY2020-FY2025 normalized net income averages $12.20B and EPS $7.80 (S2, N5). At $182.32 (N1) MS trades at 14.4x TTM (N22) but about 23.4x normalized, and TTM ROE of 16.9% (N21) versus roughly 11.8% normalized means the 2.43x P/B (N23) leans on above-cycle returns. On that same normalized base, peer median 13.85x gives $108.1 (-41%), BAC 11.2x gives $87.4 (-52%), and the best peer 16.5x gives $128.7 (-29%); all three point down, so the rule is short. This is a financial, so I value on earnings, ROE and P/B; EV/EBITDA and FCF do not apply, and the recent 21.5% drawdown (N2) is a sentiment de-rating, not an operating miss.
Key numbers
- Share price: $182.32
- Market cap: $284.97B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $80.16B
- P/E (TTM): 14.4x
- Price / book: 2.43x
The 15 boxes
- ○ 1. Long-form business notes
S22 contains only six fiscal years of XBRL facts (FY2020–FY2025) and no segment, channel, unit-economics, or history narrative, so the source does not show how the company makes money. It shows revenue rising from $48.76B in FY2020 to $70.64B in FY2025, with a drop from $59.76B in FY2021 to $53.67B in FY2022 and a pre-tax/net-income trough in FY2023. Equity and cash increased over the period while diluted shares fell, and operating cash flow was highly volatile, including -$33.54B in FY2023 and -$17.89B in FY2025.
- ✓ 2. Competitive advantage
The 10-K claims no durable moat: Morgan Stanley describes the industry as 'intensely competitive' and says it competes with commercial banks, global and regional banks, broker-dealers, private banks, RIAs, digital platforms, asset managers and fintechs on execution, capital, products, technology, reputation, risk appetite and price. The numbers fit a cyclical competitor rather than a franchise: revenue fell 10.2% from $59.76B (FY2021) to $53.67B (FY2022), pre-tax income fell from $19.67B to $14.09B, and pre-tax margin compressed from 32.9% (FY2021) to 21.8% (FY2023) before recovering to 31.1% on record $70.64B revenue in FY2025. Returns follow the same cycle on our derived figures - net income over year-end equity of roughly 8.6% in FY2023 versus 14.6% in FY2025 - so any advantage looks scale- and cycle-driven, not pricing power.
- ✓ 3. 10-Q takeaways
Q3 2026 net revenues were $20.3 billion, up 12% YoY, with net income applicable to Morgan Stanley of $4.9 billion, up 6%, and diluted EPS of $3.03, up 8%. YTD 2026 net revenues were $62.3 billion, up 18%, and diluted EPS was $9.93, up 32%. Growth was led by Institutional Securities, up 18% on Equity, and Wealth Management, up 10%, while Investment Management fell 12%. Capital and returns remained solid—CET1 standardized 14.9%, ROE 17.8%, ROTCE 22.6%—but credit provisions rose and the 10-Q flags geopolitical, rate, energy and AI-buildout uncertainties.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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