Head to Head Contrast: Eagle Point Credit (NYSE:ECC) versus Morgan Stanley (NYSE:MS)

Eagle Point Credit (NYSE:ECC) and Morgan Stanley (NYSE:MS) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their profitability, dividends, institutional ownership, earnings, valuation, risk and analyst recommendations.

Institutional & Insider Ownership

19.5% of Eagle Point Credit shares are owned by institutional investors. Comparatively, 84.2% of Morgan Stanley shares are owned by institutional investors. 0.3% of Eagle Point Credit shares are owned by insiders. Comparatively, 0.2% of Morgan Stanley shares are owned 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.

Dividends

Eagle Point Credit pays an annual dividend of $1.12 per share and has a dividend yield of 40.7%. Morgan Stanley pays an annual dividend of $4.60 per share and has a dividend yield of 2.5%. Eagle Point Credit pays out 183.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Morgan Stanley pays out 36.5% of its earnings in the form of a dividend. Morgan Stanley has increased its dividend for 12 consecutive years.

Analyst Recommendations

This is a summary of recent recommendations for Eagle Point Credit and Morgan Stanley, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Eagle Point Credit	0	2	2	0	2.50
Morgan Stanley	1	13	11	2	2.52

Eagle Point Credit presently has a consensus target price of $3.75, indicating a potential upside of 36.12%. Morgan Stanley has a consensus target price of $214.62, indicating a potential upside of 16.79%. Given Eagle Point Credit’s higher probable upside, equities research analysts clearly believe Eagle Point Credit is more favorable than Morgan Stanley.

Earnings and Valuation

This table compares Eagle Point Credit and Morgan Stanley”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Eagle Point Credit	$203.99 million	1.79	-$115.00 million	$0.61	4.52
Morgan Stanley	$119.66 billion	2.42	$16.86 billion	$12.60	14.58

Morgan Stanley has higher revenue and earnings than Eagle Point Credit. Eagle Point Credit is trading at a lower price-to-earnings ratio than Morgan Stanley, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Eagle Point Credit has a beta of 0.38, indicating that its share price is 62% less volatile than the S&P 500. Comparatively, Morgan Stanley has a beta of 1.22, indicating that its share price is 22% more volatile than the S&P 500.

Profitability

This table compares Eagle Point Credit and Morgan Stanley’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Eagle Point Credit	-84.29%	-1.83%	-0.99%
Morgan Stanley	15.63%	19.40%	1.31%

Summary

Morgan Stanley beats Eagle Point Credit on 15 of the 18 factors compared between the two stocks.

About Eagle Point Credit

Eagle Point Credit Company Inc. is a closed ended fund launched and managed by Eagle Point Credit Management LLC. It invests in fixed income markets of the United States. The fund invests equity and junior debt tranches of collateralized loan obligations consisting primarily of below investment grade U.S. senior secured loans. Eagle Point Credit Company Inc. was formed on March 24, 2014 and is domiciled in the United States.

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.