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Key Predictions for Q3 Earnings Reports of MS, GS, IBKR
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The earnings season is currently underway, with results coming out in full force this week. Tomorrow, three Investment Management/Brokerage stocks — Morgan Stanley (MS - Free Report) , The Goldman Sachs Group, Inc. (GS - Free Report) and Interactive Brokers Group, Inc. (IBKR - Free Report) — are scheduled to announce their results.
Investment management/brokerage industry (part of the broader Finance sector) performed decently over the last several quarters. Further, rising interest rates continue to benefit the industry. Also, most investment managers have stopped waiving off majority of their fees as interest rates gradually improved. So, this should aid top-line growth.
However, muted volatility in third-quarter 2017 might lead to low capital markets business. Trading revenues are expected to decrease, mainly due to low volatility in both bond and equity markets. Moreover, investment banking fees are anticipated to witness muted growth.
Per our latest Earnings Preview, overall earnings for the investment management/brokerage industry in the quarter are expected to be down 3.7% year over year. This compares unfavorably with the prior-quarter growth of 8.6%.
Now, let’s have a close look at the factors that will impact above-mentioned three investment management/brokerage companies’ third-quarter results.
Morgan Stanley is expected to record a decline in trading income — one of the major revenue components. Low market volatility and a seasonally weak period on the capital markets front are the main reasons for the decrease in trading revenues. The Zacks Consensus Estimate for trading revenues is expected to be $2.86 billion for the quarter, down 9.8% from the prior-year period.
On the other hand, total underwriting fees is projected to witness a 15.3% year-over-year rise as the Zacks Consensus Estimate for the to-be-reported quarter is $692 million. Also, advisory fees are projected to be $502 million, relatively stable year over year.
Thus, total revenues are expected to improve marginally from the prior-year quarter as the Zacks Consensus Estimate for sales is $9 billion. The Zacks Consensus Estimate for earnings of 81 cents reflects a 1.3% improvement on a year-over-year basis.
Similar to Morgan Stanley, Goldman is anticipated to witness a fall in trading revenues in the to-be-reported quarter. The Zacks Consensus Estimate for fixed income trading revenues of $1.39 billion reflects a year-over-year plunge of 29.3%. Also, the Zacks Consensus Estimate for equity trading revenues of $593 million indicates a decrease of 12.5% from the prior-year quarter.
Nevertheless, persistent rise in debt underwriting (mainly on assumption of continuous increase in interest rates) will likely provide some respite. Total underwriting fees are projected to be $894 million, improving nearly 2% year over year. Further, M&A advisory fees for the company are projected to lend support to revenues.
But these will not be enough to support revenues for this Zacks Rank #3 stock. The Zacks Consensus Estimate for sales of $7.6 billion indicates a decline of 6.5% year over year. Also, the Zacks Consensus Estimate for earnings of $4.31 reflects an 11.7% fall on a year-over-year basis. (Read more: Will Trading Weakness Impact Goldman's Q3 Earnings?)
Goldman Sachs Group, Inc. (The) Price and EPS Surprise
Interactive Brokers is projected to record year-over-year earnings growth in the third quarter. The Zacks Consensus Estimate for earnings of 37 cents reflects a 23.3% increase from the last- year quarter.
The improvement is likely to be driven by a rise in top line. The Zacks Consensus Estimate for commission and execution fees of $154 million indicates 6.9% rise from the prior-year quarter. Also, the Zacks Consensus Estimate for interest income of $243 million reflects a jump of 54.8% year over year. Thus, total revenues are expected to grow 8.7% from the prior-year quarter with the Zacks Consensus Estimate for sales being $375 million.
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Key Predictions for Q3 Earnings Reports of MS, GS, IBKR
The earnings season is currently underway, with results coming out in full force this week. Tomorrow, three Investment Management/Brokerage stocks — Morgan Stanley (MS - Free Report) , The Goldman Sachs Group, Inc. (GS - Free Report) and Interactive Brokers Group, Inc. (IBKR - Free Report) — are scheduled to announce their results.
Investment management/brokerage industry (part of the broader Finance sector) performed decently over the last several quarters. Further, rising interest rates continue to benefit the industry. Also, most investment managers have stopped waiving off majority of their fees as interest rates gradually improved. So, this should aid top-line growth.
However, muted volatility in third-quarter 2017 might lead to low capital markets business. Trading revenues are expected to decrease, mainly due to low volatility in both bond and equity markets. Moreover, investment banking fees are anticipated to witness muted growth.
Per our latest Earnings Preview, overall earnings for the investment management/brokerage industry in the quarter are expected to be down 3.7% year over year. This compares unfavorably with the prior-quarter growth of 8.6%.
Now, let’s have a close look at the factors that will impact above-mentioned three investment management/brokerage companies’ third-quarter results.
Morgan Stanley is expected to record a decline in trading income — one of the major revenue components. Low market volatility and a seasonally weak period on the capital markets front are the main reasons for the decrease in trading revenues. The Zacks Consensus Estimate for trading revenues is expected to be $2.86 billion for the quarter, down 9.8% from the prior-year period.
On the other hand, total underwriting fees is projected to witness a 15.3% year-over-year rise as the Zacks Consensus Estimate for the to-be-reported quarter is $692 million. Also, advisory fees are projected to be $502 million, relatively stable year over year.
Thus, total revenues are expected to improve marginally from the prior-year quarter as the Zacks Consensus Estimate for sales is $9 billion. The Zacks Consensus Estimate for earnings of 81 cents reflects a 1.3% improvement on a year-over-year basis.
The stock currently has a Zacks Rank #3 (Hold). (Read more: Will Trading Slowdown Hurt Morgan Stanley Q3 Earnings?)
Morgan Stanley Price and EPS Surprise
Morgan Stanley Price and EPS Surprise | Morgan Stanley Quote
Similar to Morgan Stanley, Goldman is anticipated to witness a fall in trading revenues in the to-be-reported quarter. The Zacks Consensus Estimate for fixed income trading revenues of $1.39 billion reflects a year-over-year plunge of 29.3%. Also, the Zacks Consensus Estimate for equity trading revenues of $593 million indicates a decrease of 12.5% from the prior-year quarter.
Nevertheless, persistent rise in debt underwriting (mainly on assumption of continuous increase in interest rates) will likely provide some respite. Total underwriting fees are projected to be $894 million, improving nearly 2% year over year. Further, M&A advisory fees for the company are projected to lend support to revenues.
But these will not be enough to support revenues for this Zacks Rank #3 stock. The Zacks Consensus Estimate for sales of $7.6 billion indicates a decline of 6.5% year over year. Also, the Zacks Consensus Estimate for earnings of $4.31 reflects an 11.7% fall on a year-over-year basis. (Read more: Will Trading Weakness Impact Goldman's Q3 Earnings?)
Goldman Sachs Group, Inc. (The) Price and EPS Surprise
Goldman Sachs Group, Inc. (The) Price and EPS Surprise | Goldman Sachs Group, Inc. (The) Quote
Interactive Brokers is projected to record year-over-year earnings growth in the third quarter. The Zacks Consensus Estimate for earnings of 37 cents reflects a 23.3% increase from the last- year quarter.
The improvement is likely to be driven by a rise in top line. The Zacks Consensus Estimate for commission and execution fees of $154 million indicates 6.9% rise from the prior-year quarter. Also, the Zacks Consensus Estimate for interest income of $243 million reflects a jump of 54.8% year over year. Thus, total revenues are expected to grow 8.7% from the prior-year quarter with the Zacks Consensus Estimate for sales being $375 million.
Additionally, at the end of the quarter, Interactive Brokers is projected to have 446,000 brokerage accounts, up 20.5% year over year. The stock currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Interactive Brokers Group, Inc. Price and EPS Surprise
Interactive Brokers Group, Inc. Price and EPS Surprise | Interactive Brokers Group, Inc. Quote
5 Trades Could Profit ""Big-League"" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure.
See these buy recommendations now >>