We came across a bullish thesis on MSCI Inc. (MSCI) on Substack by Quality Equities. In this article, we will summarize the bulls’ thesis on MSCI. MSCI Inc. (MSCI)’s share was trading at $612.02 as of Jan 17th. MSCI’s trailing and forward P/E were 40.21 and 36.10 respectively according to Yahoo Finance.
A senior manager studying a market index alongside a team of young stock market analysts.
MSCI is a global provider of investment decision-support tools, serving institutional investors such as asset managers, hedge funds, and pension funds. The company operates through four main segments: Indexes, Analytics, ESG & Climate, and Private Assets. Its Indexes segment is widely recognized for key benchmarks like the MSCI World and Emerging Markets Indexes, which are crucial for portfolio benchmarking and the creation of investment products like exchange-traded funds (ETFs). The Analytics segment offers portfolio risk management and performance analysis tools, while the ESG & Climate segment provides data and ratings related to sustainability. Additionally, the Private Assets segment supports investments in real estate and private equity.
MSCI generates the majority of its revenue from recurring subscription fees and licensing arrangements. Subscriptions offer access to the company’s data, analytics tools, and ESG research, while licensing fees are tied to the use of MSCI’s indices by asset managers and institutions to create investment products. The company also offers consulting and custom solutions, catering to the specific needs of institutional clients.
The company currently has a free cash flow yield of 3.01% (TTM), reflecting a strong financial position. A reverse discounted cash flow (DCF) analysis suggests the market is pricing in a 10-year free cash flow compound annual growth rate (CAGR) of 15.21%, indicating that MSCI is positioned at an attractive valuation.
MSCI’s stable revenue model and strong presence in the investment data and analytics industry position it as a promising long-term investment. Its reliance on recurring revenue from subscriptions and licensing ensures financial stability and sustainable growth. Given its solid market position and ability to provide valuable data, analytics, and insights, MSCI offers significant potential for investors. Maintaining a patient and disciplined approach will allow investors to capitalize on its steady performance and growth opportunities in the future.
MSCI Inc. (MSCI) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 55 hedge fund portfolios held MSCI at the end of the third quarter which was 47 in the previous quarter. While we acknowledge the risk and potential of MSCI as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MSCI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.