THE BUSINESSWEEK 50 RANKINGS + 25

39

Morgan Stanley

Investment bank Morgan Stanley is getting back its mojo. Since former president John Mack returned to take charge as CEO in June, 2005, the firm has thrived by upgrading its businesses. Its traders are taking bigger risks and putting more of the bank’s own money behind trades. While brokers are focusing more on wealthy clients who want high-octane investments, the firm’s asset management business is launching private equity funds and acquiring hedge funds or taking minority stakes in them. Meantime, Morgan Stanley is finally getting out of a business that never seemed to jibe with its white-shoe image—the Discover credit card. Bottom line: Morgan Stanley’s stock has surged 43% since Mack came back.

Overall Grade

A-

Market Data

MS

Market Value
(2/28/2007)

$78.6 Billion

Profitability*

27.0%

B+

Sales Growth Rate**

30.1%

A-

12-Month Sales

$76.6 Billion

12-Month Net Income

$7.5 Billion

Total Return Past 12 Months

27.5%

Past 36 Months

32.3%

Economic SectorFinancials
IndustryInvestment Banking & Brokerage
The overall sector letter grade reflects how the weighted average of the return on income, or return on equity, and sales growth grades compare with others in the same sector. For the overall grade as well as the ROE/ROI and sales growth grades, an "A" places a company in the top 7% of its sector and an "A-" in the top 14% of the sector. The actual ranking was done using the underlying numerical measures. Grades are for information only.
* For nonfinancial companies, three-year average pretax operating profit before interest and special items as a percentage of average invested capital. For financial companies, pretax profits as a percentage of average shareholder's equity.
*Three-year average annual sales growth based on the most recently reported 36 months, calculated using the least-squares method.
$FOOTNOTE

John J. Mack

John J. Mack, 62

CEO since 2005


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Data as of 2/28/07 provided by Standard & Poor's Compustat