Contrasting Morgan Stanley (NYSE:MS) & The PNC Financial Services Group (NYSE:PNC)

Morgan Stanley (NYSE:MS) and The PNC Financial Services Group (NYSE:PNC) are both large-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, risk, earnings, profitability, analyst recommendations, institutional ownership and dividends.

Profitability

This table compares Morgan Stanley and The PNC Financial Services Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Morgan Stanley	14.65%	17.70%	1.27%
The PNC Financial Services Group	20.89%	12.10%	1.27%

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Morgan Stanley and The PNC Financial Services Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Morgan Stanley	0	12	12	0	2.50
The PNC Financial Services Group	0	5	15	1	2.81

Morgan Stanley presently has a consensus price target of $206.35, suggesting a potential downside of 7.75%. The PNC Financial Services Group has a consensus price target of $246.72, suggesting a potential upside of 6.17%. Given The PNC Financial Services Group’s stronger consensus rating and higher probable upside, analysts plainly believe The PNC Financial Services Group is more favorable than Morgan Stanley.

Dividends

Morgan Stanley pays an annual dividend of $4.00 per share and has a dividend yield of 1.8%. The PNC Financial Services Group pays an annual dividend of $6.80 per share and has a dividend yield of 2.9%. Morgan Stanley pays out 36.2% of its earnings in the form of a dividend. The PNC Financial Services Group pays out 39.5% 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. Morgan Stanley has increased its dividend for 12 consecutive years and The PNC Financial Services Group has increased its dividend for 14 consecutive years. The PNC Financial Services Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

84.2% of Morgan Stanley shares are owned by institutional investors. Comparatively, 83.5% of The PNC Financial Services Group shares are owned by institutional investors. 0.2% of Morgan Stanley shares are owned by company insiders. Comparatively, 0.4% of The PNC Financial Services Group shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Risk & Volatility

Morgan Stanley has a beta of 1.23, suggesting that its stock price is 23% more volatile than the S&P 500. Comparatively, The PNC Financial Services Group has a beta of 0.92, suggesting that its stock price is 8% less volatile than the S&P 500.

Valuation and Earnings

This table compares Morgan Stanley and The PNC Financial Services Group”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Morgan Stanley	$119.66 billion	2.95	$16.86 billion	$11.04	20.26
The PNC Financial Services Group	$34.00 billion	2.75	$6.94 billion	$17.21	13.50

Morgan Stanley has higher revenue and earnings than The PNC Financial Services Group. The PNC Financial Services Group is trading at a lower price-to-earnings ratio than Morgan Stanley, indicating that it is currently the more affordable of the two stocks.

Summary

The PNC Financial Services Group beats Morgan Stanley on 9 of the 17 factors compared between the two stocks.

About Morgan Stanley

Morgan Stanley, a financial holding company, provides various financial products and services to corporations, governments, financial institutions, and individuals in the Americas, Europe, the Middle East, Africa, and Asia. It operates through Institutional Securities, Wealth Management, and Investment Management segments. The Institutional Securities segment offers capital raising and financial advisory services, including services related to the underwriting of debt, equity, and other securities, as well as advice on mergers and acquisitions, restructurings, real estate, and project finance. This segment also provides equity and fixed income products comprising sales, financing, prime brokerage, and market-making services; foreign exchange and commodities; corporate and commercial real estate loans, commercial mortgage and secured lending facilities, and financing for sales and trading customers, and asset-backed and mortgage lending; and wealth management services, investment, and research services. The Wealth Management segment offers financial advisor-led brokerage, custody, administrative, and investment advisory services; self-directed brokerage services; financial and wealth planning services; workplace services, including stock plan administration; annuity and insurance products; securities-based lending, residential real estate loans, and other lending products; banking; and retirement plan services to individual investors and small to medium-sized businesses and institutions. The Investment Management segment provides equity, fixed income, alternatives and solutions, and liquidity and overlay services to benefit/defined contribution plans, foundations, endowments, government entities, sovereign wealth funds, insurance companies, third-party fund sponsors, corporations, and individuals through institutional and intermediary channels. The company was founded in 1924 and is headquartered in New York, New York.

About The PNC Financial Services Group

The PNC Financial Services Group, Inc. operates as a diversified financial services company in the United States. It operates through three segments: Retail Banking, Corporate & Institutional Banking, and Asset Management Group segments. The company's Retail Banking segment offers checking, savings, and money market accounts, as well as time deposit; residential mortgages, home equity loans and lines of credit, auto loans, credit cards, education loans, and personal and small business loans and lines of credit; and brokerage, insurance, and investment and cash management services. This segment serves consumer and small business customers through a network of branches, digital channels, ATMs, and through phone-based customer contact centers. Its Corporate & Institutional Banking segment provides secured and unsecured loans, letters of credit, and equipment leases; cash and investment management services, receivables and disbursement management services, funds transfer services, international payment services, and access to online/mobile information management and reporting; securities underwriting, loan syndications, customer-related trading, and mergers and acquisitions and equity capital markets advisory related services; and commercial loan servicing and technology solutions. It serves mid-sized and large corporations, and government and not-for-profit entities. The company's Asset Management Group segment offers investment and retirement planning, customized investment management, credit and cash management solutions, and trust management and administration services for high net worth and ultra high net worth individuals, and their families; and multi-generational family planning services for ultra high net worth individuals and their families. It also provides outsourced chief investment officer, custody, private real estate, cash and fixed income client solutions, and retirement plan fiduciary investment services for institutional clients. The company was founded in 1852 and is headquartered in Pittsburgh, Pennsylvania.