This earnings season is expected to be strong across the board, which may help to explain why stocks are near all time highs. The banks were an exception to the rule heading into their quarterly reports, but profits surpassing expectations have elevated sentiment for the remaining financials. Most large financial institutions were expected to report significant contractions in earnings this quarter.
While earnings at the majority of the banks are down compared to last year, profits have come in much stronger than previously anticipated. So far already this earnings season Citigroup (NYSE:C), J P Morgan Chase (NYSE:JPM), Goldman Sachs (NYSE:GS), Bank of America (NYSE:BAC) and BlackRock (NYSE:BLK) have all come in well ahead ahead of Wall Street estimates, while Wells Fargo reported a 3% gain in year over year earnings but came in-line with Wall Street estimates.
Morgan Stanley (NYSE:MS) is set to report FQ2 2014 earnings before the market opens on Thursday, July 17th. This quarter 26 contributing analysts on Estimize.com have come to a consensus earnings expectation of 61c EPS and $8.438B in revenue compared to a consensus of 55c EPS and $8.179B from Wall Street. Over the previous 6 quarters crowdsourced forward looking financial estimates platform Estimize.com has been more accurate than Wall Street in forecasting Morgan Stanley’s earnings per share and revenue 4 times each.
Estimize.com ranks and allows the sorting of analysts by accuracy, the analyst with the lowest error rate on Morgan Stanley with at least 2 estimates scored is an anonymous sell side broker who goes by the username DS884723. Over 2 previously scored estimates DS884723 has averaged an impressively low error rate of 1.9%. Estimize is completely open and free for anyone to contribute, and the base of contributing analysts on the platform includes hedge fund analysts, asset managers, independent research shops, non professional investors, and students.
The Estimize consensus was more accurate than the Wall Street consensus 65% of the time last quarter on the coverage of nearly 1000 stocks. A combination of algorithms ensures that the data is not only clean and free from people attempting to game the system, but also weighs past performance and many other factors to gauge future accuracy.
Last quarter Morgan Stanley put up great numbers on both the top and bottom line, coming in way above the Estimize consensus and reporting year over year EPS and revenue growth of 11% and 9% respectively. Over the past year Morgan Stanley has beaten the Wall Street consensus in all 4 quarters and has beaten the Street’s revenue forecast 3 times, with two of those beats coming in at large margins.
Financial results from the banks that have reported already this earnings season indicate that the financial industry may be moderately more healthy than previously thought. Contributing analysts on the Estimize.com platform are forecasting that Morgan Stanley will come in 6c (11%) ahead of Wall Street’s EPS forecast and $259 million (3%) above on revenue. The Estimize community also expects earnings to rise considerably from 45c in FQ2 of last quarter to 61c this quarter, making Morgan Stanley a standout among the financials.