Intrinsic value of MSCI Inc - MSCI

Previous Close

$221.35

  Intrinsic Value

$45.94

stock screener

  Rating & Target

str. sell

-79%

Previous close

$221.35

 
Intrinsic value

$45.94

 
Up/down potential

-79%

 
Rating

str. sell

We calculate the intrinsic value of MSCI stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 18.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  8.00
  7.70
  7.43
  7.19
  6.97
  6.77
  6.59
  6.43
  6.29
  6.16
  6.05
  5.94
  5.85
  5.76
  5.69
  5.62
  5.56
  5.50
  5.45
  5.41
  5.36
  5.33
  5.30
  5.27
  5.24
  5.22
  5.19
  5.17
  5.16
  5.14
Revenue, $m
  1,549
  1,668
  1,792
  1,921
  2,055
  2,194
  2,338
  2,489
  2,645
  2,808
  2,978
  3,155
  3,340
  3,532
  3,733
  3,943
  4,162
  4,391
  4,630
  4,880
  5,142
  5,416
  5,703
  6,003
  6,317
  6,647
  6,992
  7,354
  7,733
  8,131
Variable operating expenses, $m
  496
  521
  546
  572
  599
  627
  656
  687
  719
  752
  603
  639
  677
  716
  756
  799
  843
  889
  938
  989
  1,042
  1,097
  1,155
  1,216
  1,280
  1,347
  1,417
  1,490
  1,567
  1,647
Fixed operating expenses, $m
  286
  292
  299
  305
  312
  319
  326
  333
  341
  348
  356
  364
  372
  380
  388
  397
  405
  414
  423
  433
  442
  452
  462
  472
  482
  493
  504
  515
  526
  538
Total operating expenses, $m
  782
  813
  845
  877
  911
  946
  982
  1,020
  1,060
  1,100
  959
  1,003
  1,049
  1,096
  1,144
  1,196
  1,248
  1,303
  1,361
  1,422
  1,484
  1,549
  1,617
  1,688
  1,762
  1,840
  1,921
  2,005
  2,093
  2,185
Operating income, $m
  766
  855
  947
  1,043
  1,143
  1,247
  1,356
  1,469
  1,586
  1,709
  2,019
  2,152
  2,291
  2,437
  2,589
  2,747
  2,913
  3,087
  3,268
  3,459
  3,658
  3,867
  4,085
  4,315
  4,555
  4,807
  5,072
  5,349
  5,640
  5,946
EBITDA, $m
  997
  1,090
  1,186
  1,286
  1,390
  1,499
  1,611
  1,729
  1,851
  1,979
  2,112
  2,251
  2,396
  2,547
  2,705
  2,870
  3,043
  3,224
  3,413
  3,611
  3,818
  4,036
  4,263
  4,502
  4,752
  5,015
  5,290
  5,578
  5,881
  6,199
Interest expense (income), $m
  89
  147
  127
  141
  156
  171
  186
  203
  220
  238
  256
  275
  295
  316
  338
  361
  384
  409
  435
  462
  490
  520
  551
  583
  617
  652
  689
  728
  769
  811
  856
Earnings before tax, $m
  619
  728
  806
  888
  973
  1,061
  1,153
  1,249
  1,348
  1,452
  1,744
  1,857
  1,975
  2,099
  2,228
  2,363
  2,504
  2,652
  2,806
  2,969
  3,138
  3,316
  3,503
  3,698
  3,903
  4,118
  4,344
  4,580
  4,829
  5,089
Tax expense, $m
  167
  197
  218
  240
  263
  286
  311
  337
  364
  392
  471
  501
  533
  567
  602
  638
  676
  716
  758
  801
  847
  895
  946
  998
  1,054
  1,112
  1,173
  1,237
  1,304
  1,374
Net income, $m
  452
  531
  589
  648
  710
  775
  842
  912
  984
  1,060
  1,273
  1,356
  1,442
  1,532
  1,626
  1,725
  1,828
  1,936
  2,049
  2,167
  2,291
  2,421
  2,557
  2,700
  2,849
  3,006
  3,171
  3,344
  3,525
  3,715

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  3,560
  3,834
  4,119
  4,415
  4,723
  5,043
  5,375
  5,721
  6,081
  6,456
  6,846
  7,253
  7,677
  8,120
  8,581
  9,063
  9,567
  10,093
  10,643
  11,219
  11,820
  12,450
  13,110
  13,800
  14,523
  15,280
  16,074
  16,906
  17,777
  18,691
Adjusted assets (=assets-cash), $m
  3,560
  3,834
  4,119
  4,415
  4,723
  5,043
  5,375
  5,721
  6,081
  6,456
  6,846
  7,253
  7,677
  8,120
  8,581
  9,063
  9,567
  10,093
  10,643
  11,219
  11,820
  12,450
  13,110
  13,800
  14,523
  15,280
  16,074
  16,906
  17,777
  18,691
Revenue / Adjusted assets
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
  0.435
Average production assets, $m
  1,101
  1,186
  1,274
  1,366
  1,461
  1,560
  1,663
  1,770
  1,881
  1,997
  2,117
  2,243
  2,374
  2,511
  2,654
  2,803
  2,959
  3,122
  3,292
  3,470
  3,656
  3,851
  4,055
  4,268
  4,492
  4,726
  4,971
  5,229
  5,498
  5,781
Working capital, $m
  -300
  -324
  -348
  -373
  -399
  -426
  -454
  -483
  -513
  -545
  -578
  -612
  -648
  -685
  -724
  -765
  -807
  -852
  -898
  -947
  -998
  -1,051
  -1,106
  -1,165
  -1,226
  -1,290
  -1,356
  -1,427
  -1,500
  -1,577
Total debt, $m
  2,225
  2,472
  2,728
  2,995
  3,272
  3,560
  3,859
  4,170
  4,494
  4,831
  5,183
  5,549
  5,931
  6,329
  6,744
  7,178
  7,631
  8,105
  8,600
  9,118
  9,659
  10,226
  10,820
  11,441
  12,092
  12,773
  13,488
  14,236
  15,021
  15,843
Total liabilities, $m
  3,204
  3,451
  3,707
  3,974
  4,251
  4,539
  4,838
  5,149
  5,473
  5,810
  6,162
  6,528
  6,909
  7,308
  7,723
  8,157
  8,610
  9,084
  9,579
  10,097
  10,638
  11,205
  11,799
  12,420
  13,071
  13,752
  14,467
  15,215
  16,000
  16,822
Total equity, $m
  356
  383
  412
  442
  472
  504
  538
  572
  608
  646
  685
  725
  768
  812
  858
  906
  957
  1,009
  1,064
  1,122
  1,182
  1,245
  1,311
  1,380
  1,452
  1,528
  1,607
  1,691
  1,778
  1,869
Total liabilities and equity, $m
  3,560
  3,834
  4,119
  4,416
  4,723
  5,043
  5,376
  5,721
  6,081
  6,456
  6,847
  7,253
  7,677
  8,120
  8,581
  9,063
  9,567
  10,093
  10,643
  11,219
  11,820
  12,450
  13,110
  13,800
  14,523
  15,280
  16,074
  16,906
  17,778
  18,691
Debt-to-equity ratio
  6.250
  6.450
  6.620
  6.780
  6.930
  7.060
  7.180
  7.290
  7.390
  7.480
  7.570
  7.650
  7.720
  7.790
  7.860
  7.920
  7.980
  8.030
  8.080
  8.130
  8.170
  8.210
  8.250
  8.290
  8.330
  8.360
  8.390
  8.420
  8.450
  8.480
Adjusted equity ratio
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  452
  531
  589
  648
  710
  775
  842
  912
  984
  1,060
  1,273
  1,356
  1,442
  1,532
  1,626
  1,725
  1,828
  1,936
  2,049
  2,167
  2,291
  2,421
  2,557
  2,700
  2,849
  3,006
  3,171
  3,344
  3,525
  3,715
Depreciation, amort., depletion, $m
  231
  235
  239
  243
  247
  251
  256
  260
  265
  270
  93
  98
  104
  110
  116
  123
  130
  137
  144
  152
  160
  169
  178
  187
  197
  207
  218
  229
  241
  254
Funds from operations, $m
  683
  766
  827
  891
  957
  1,026
  1,097
  1,172
  1,250
  1,331
  1,366
  1,454
  1,546
  1,642
  1,743
  1,848
  1,958
  2,073
  2,193
  2,319
  2,451
  2,590
  2,735
  2,887
  3,046
  3,213
  3,389
  3,573
  3,766
  3,969
Change in working capital, $m
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
  -33
  -34
  -36
  -37
  -39
  -41
  -42
  -44
  -46
  -49
  -51
  -53
  -56
  -58
  -61
  -64
  -67
  -70
  -74
  -77
Cash from operations, $m
  705
  789
  851
  916
  983
  1,053
  1,125
  1,201
  1,280
  1,362
  1,399
  1,488
  1,582
  1,680
  1,782
  1,888
  2,000
  2,117
  2,240
  2,368
  2,502
  2,643
  2,790
  2,945
  3,107
  3,277
  3,456
  3,643
  3,840
  4,046
Maintenance CAPEX, $m
  -45
  -48
  -52
  -56
  -60
  -64
  -68
  -73
  -78
  -82
  -88
  -93
  -98
  -104
  -110
  -116
  -123
  -130
  -137
  -144
  -152
  -160
  -169
  -178
  -187
  -197
  -207
  -218
  -229
  -241
New CAPEX, $m
  -81
  -85
  -88
  -92
  -95
  -99
  -103
  -107
  -111
  -116
  -121
  -126
  -131
  -137
  -143
  -149
  -156
  -163
  -170
  -178
  -186
  -195
  -204
  -214
  -224
  -234
  -245
  -257
  -270
  -283
Cash from investing activities, $m
  -126
  -133
  -140
  -148
  -155
  -163
  -171
  -180
  -189
  -198
  -209
  -219
  -229
  -241
  -253
  -265
  -279
  -293
  -307
  -322
  -338
  -355
  -373
  -392
  -411
  -431
  -452
  -475
  -499
  -524
Free cash flow, $m
  579
  656
  711
  768
  828
  890
  954
  1,021
  1,091
  1,164
  1,190
  1,270
  1,352
  1,439
  1,529
  1,623
  1,722
  1,825
  1,932
  2,045
  2,164
  2,288
  2,418
  2,554
  2,696
  2,846
  3,003
  3,168
  3,341
  3,522
Issuance/(repayment) of debt, $m
  -350
  247
  256
  266
  277
  288
  299
  311
  324
  337
  351
  366
  382
  398
  416
  434
  453
  474
  495
  518
  542
  567
  593
  621
  651
  682
  714
  749
  785
  823
Issuance/(repurchase) of shares, $m
  166
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -184
  247
  256
  266
  277
  288
  299
  311
  324
  337
  351
  366
  382
  398
  416
  434
  453
  474
  495
  518
  542
  567
  593
  621
  651
  682
  714
  749
  785
  823
Total cash flow (excl. dividends), $m
  395
  903
  968
  1,035
  1,105
  1,177
  1,253
  1,332
  1,415
  1,501
  1,542
  1,636
  1,734
  1,837
  1,944
  2,057
  2,175
  2,298
  2,428
  2,563
  2,705
  2,854
  3,011
  3,175
  3,347
  3,528
  3,717
  3,916
  4,125
  4,345
Retained Cash Flow (-), $m
  -618
  -27
  -28
  -30
  -31
  -32
  -33
  -35
  -36
  -37
  -39
  -41
  -42
  -44
  -46
  -48
  -50
  -53
  -55
  -58
  -60
  -63
  -66
  -69
  -72
  -76
  -79
  -83
  -87
  -91
Prev. year cash balance distribution, $m
  95
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  -128
  876
  939
  1,005
  1,074
  1,145
  1,220
  1,298
  1,379
  1,464
  1,503
  1,595
  1,692
  1,792
  1,898
  2,009
  2,124
  2,246
  2,373
  2,506
  2,645
  2,792
  2,945
  3,106
  3,275
  3,452
  3,638
  3,833
  4,038
  4,253
Discount rate, %
  7.90
  8.30
  8.71
  9.15
  9.60
  10.08
  10.59
  11.12
  11.67
  12.26
  12.87
  13.51
  14.19
  14.90
  15.64
  16.42
  17.24
  18.11
  19.01
  19.96
  20.96
  22.01
  23.11
  24.27
  25.48
  26.75
  28.09
  29.49
  30.97
  32.52
PV of cash for distribution, $m
  -118
  747
  731
  708
  679
  644
  603
  558
  511
  461
  397
  349
  301
  257
  215
  176
  142
  112
  87
  66
  49
  35
  25
  17
  11
  7
  5
  3
  2
  1
Current shareholders' claim on cash, %
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

MSCI Inc. offers products and services to support the needs of institutional investors throughout their investment processes. Its segments include Index, Analytics and All Other segment. All Other segment comprises environmental, social and governance (ESG) and Real Estate segments. Its indexes are used in various areas of the investment process, including index-linked product creation and performance benchmarking, as well as portfolio construction and rebalancing, and asset allocation. The Analytics segment uses analytical content to create products and services, which offer institutional investors an integrated view of risk and return. MSCI's ESG products include MSCI ESG Ratings, MSCI ESG Business Involvement Screening Research and MSCI ESG Governance Metrics. MSCI's Real Estate products comprise private real estate benchmarks and indexes branded IPD Group Limited (IPD) and include Portfolio Analysis Service (PAS), IPD Rental Information Service (IRIS) and IPD Global Intel.

FINANCIAL RATIOS  of  MSCI Inc (MSCI)

Valuation Ratios
P/E Ratio 77.4
Price to Sales 17.6
Price to Book 63.5
Price to Tangible Book
Price to Cash Flow 46.4
Price to Free Cash Flow 51.5
Growth Rates
Sales Growth Rate 7.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -12.2%
Cap. Spend. - 3 Yr. Gr. Rate -0.5%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 652.5%
Total Debt to Equity 652.5%
Interest Coverage 5
Management Effectiveness
Return On Assets 10.3%
Ret/ On Assets - 3 Yr. Avg. 9.5%
Return On Total Capital 10.7%
Ret/ On T. Cap. - 3 Yr. Avg. 10.9%
Return On Equity 42.8%
Return On Equity - 3 Yr. Avg. 27%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 78.1%
Gross Margin - 3 Yr. Avg. 74.1%
EBITDA Margin 48.3%
EBITDA Margin - 3 Yr. Avg. 44%
Operating Margin 42.4%
Oper. Margin - 3 Yr. Avg. 37.9%
Pre-Tax Margin 33.5%
Pre-Tax Margin - 3 Yr. Avg. 32.3%
Net Profit Margin 22.7%
Net Profit Margin - 3 Yr. Avg. 24%
Effective Tax Rate 32.4%
Eff/ Tax Rate - 3 Yr. Avg. 34%
Payout Ratio 36.8%

MSCI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MSCI stock intrinsic value calculation we used $1434 million for the last fiscal year's total revenue generated by MSCI Inc. The default revenue input number comes from 0001 income statement of MSCI Inc. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our MSCI stock valuation model: a) initial revenue growth rate of 8% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 7.9%, whose default value for MSCI is calculated based on our internal credit rating of MSCI Inc, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of MSCI Inc.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of MSCI stock the variable cost ratio is equal to 33%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $280 million in the base year in the intrinsic value calculation for MSCI stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.7% for MSCI Inc.

Corporate tax rate of 27% is the nominal tax rate for MSCI Inc. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the MSCI stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for MSCI are equal to 71.1%.

Life of production assets of 22.8 years is the average useful life of capital assets used in MSCI Inc operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for MSCI is equal to -19.4%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $-166.494 million for MSCI Inc - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 84.661 million for MSCI Inc is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of MSCI Inc at the current share price and the inputted number of shares is $18.7 billion.

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