Goldman Sachs Group, Inc. (The) (NYSE: GS) and Morgan Stanley (NYSE:MS) are both large-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, profitabiliy, valuation, risk and earnings.
Dividends
Goldman Sachs Group, Inc. (The) pays an annual dividend of $3.00 per share and has a dividend yield of 1.4%. Morgan Stanley pays an annual dividend of $0.80 per share and has a dividend yield of 1.7%. Goldman Sachs Group, Inc. (The) pays out 15.7% of its earnings in the form of a dividend. Morgan Stanley pays out 22.9% 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. Goldman Sachs Group, Inc. (The) has increased its dividend for 5 consecutive years and Morgan Stanley has increased its dividend for 3 consecutive years.
Valuation & Earnings
This table compares Goldman Sachs Group, Inc. (The) and Morgan Stanley’s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| Goldman Sachs Group, Inc. (The) | $32.30 billion | 2.68 | $7.50 billion | $19.06 | 11.55 |
| Morgan Stanley | $36.58 billion | 2.36 | $6.46 billion | $3.49 | 13.35 |
Goldman Sachs Group, Inc. (The) has higher revenue, but lower earnings than Morgan Stanley. Goldman Sachs Group, Inc. (The) is trading at a lower price-to-earnings ratio than Morgan Stanley, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Goldman Sachs Group, Inc. (The) and Morgan Stanley’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Goldman Sachs Group, Inc. (The) | 26.44% | 11.25% | 0.97% |
| Morgan Stanley | 16.77% | 9.86% | 0.85% |
Institutional & Insider Ownership
74.4% of Goldman Sachs Group, Inc. (The) shares are held by institutional investors. Comparatively, 85.3% of Morgan Stanley shares are held by institutional investors. 2.6% of Goldman Sachs Group, Inc. (The) shares are held by insiders. Comparatively, 0.4% of Morgan Stanley shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
Risk & Volatility
Goldman Sachs Group, Inc. (The) has a beta of 1.42, suggesting that its stock price is 42% more volatile than the S&P 500. Comparatively, Morgan Stanley has a beta of 1.63, suggesting that its stock price is 63% more volatile than the S&P 500.
Analyst Recommendations
This is a summary of current recommendations for Goldman Sachs Group, Inc. (The) and Morgan Stanley, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Goldman Sachs Group, Inc. (The) | 1 | 13 | 11 | 0 | 2.40 |
| Morgan Stanley | 1 | 6 | 15 | 1 | 2.70 |
Goldman Sachs Group, Inc. (The) presently has a consensus price target of $237.50, indicating a potential upside of 7.87%. Morgan Stanley has a consensus price target of $47.79, indicating a potential upside of 2.57%. Given Goldman Sachs Group, Inc. (The)’s higher possible upside, analysts clearly believe Goldman Sachs Group, Inc. (The) is more favorable than Morgan Stanley.
Summary
Goldman Sachs Group, Inc. (The) beats Morgan Stanley on 10 of the 18 factors compared between the two stocks.
Goldman Sachs Group, Inc. (The) Company Profile
The Goldman Sachs Group, Inc. is an investment banking, securities and investment management company that provides a range of financial services to corporations, financial institutions, governments and individuals. The Company operates in four business segments: Investment Banking, Institutional Client Services, Investing & Lending, and Investment Management. The Investment Banking segment consists of financial advisory and underwriting. The Institutional Client Services segment makes markets and facilitates client transactions in fixed income, equity, currency and commodity products. The investing and lending activities, which are typically longer-term, include its investing and relationship lending activities across various asset classes, primarily debt securities and loans, public and private equity securities, infrastructure and real estate. The Investment Management segment provides investment and wealth advisory services. As of December 2016, it had offices in over 30 countries.
Morgan Stanley Company Profile
Morgan Stanley is a financial holding company. The Company’s segments include Institutional Securities, Wealth Management and Investment Management. The Company’s Institutional Securities business segment provides investment banking, sales and trading, and other services to corporations, governments, financial institutions and high-to-ultra high net worth clients. The Company’s Wealth Management business segment provides an array of financial services and solutions to individual investors and small-to-medium sized businesses and institutions covering brokerage and investment advisory services, market-making activities in fixed income securities, financial and wealth planning services, annuity and insurance products, credit and other lending products, banking and retirement plan services. The Company’s Investment Management business segment provides a range of investment strategies and products.
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