MS · Q2 FY2026
MORGAN STANLEY Q2 FY2026 earnings analysis
By SageNoodle ResearchBullish
| Metric | Actual | Estimate | Result |
|---|---|---|---|
| Revenue | $21.35B | $16.79B (yr ago) | Beat |
| EPS | $3.46 | $2.13 (yr ago) | Beat |
| Free Cash Flow | Not meaningful for a financial company (table: -$2.75B) | Not meaningful (yr ago table: $11.83B) | Miss |
| Gross Margin | Not meaningful for a financial company | Not meaningful (yr ago) | Miss |
| Operating Margin | 34.4% pre-tax margin | 27.5% pre-tax margin (yr ago) | Beat |
What changed
Revenue increased 27.2% year over year to $21.35B, while EPS rose 62.4% to $3.46. The pre-tax margin expanded 6.9 percentage points to 34.4%, and all three measures also improved sequentially. Free cash flow and gross margin are not useful measures for Morgan Stanley because customer financing, trading inventories and other balance-sheet flows dominate a financial institution’s cash-flow statement.
Impact on the investment thesis
There was no prior SageNoodle fair value to revise. We initiate fair value at $198 per share, based on 16.0x trailing EPS of $12.37; the strong quarter supports the earnings base, but the current 17.2x multiple already recognizes much of the improvement.