Is Morgan Stanley overvalued or undervalued?

As of 23 April 2025, Morgan Stanley's valuation grade has moved from fair to expensive, indicating that the company is currently overvalued. The P/E ratio stands at 17, while the industry average P/E is significantly higher at 36.62, suggesting that Morgan Stanley's earnings are not being valued as favorably as its peers. Additionally, the company's EV to EBITDA ratio is 37.04, which is also on the higher side compared to competitors like The Charles Schwab Corp. with an EV to EBITDA of 9.67, further reinforcing the notion of overvaluation.
In terms of key financial metrics, Morgan Stanley's PEG ratio is notably low at 0.33, which typically suggests potential for growth, but this is overshadowed by its high valuation in the current market. The company has a ROE of 13.38% and a dividend yield of 189.74%, which are attractive features, yet they do not compensate for the elevated valuation. Overall, given the current metrics and peer comparisons, Morgan Stanley appears to be overvalued in the market, despite its recent stock performance outpacing the S&P 500 over various time frames.