MSCI (MSCI)

Investment analytics provider MSCI (NYSE:MSCI) met Wall Streets revenue expectations in Q4 CY2025, with sales up 10.6% year on year to $822.5 million. Its non-GAAP profit of $4.66 per share was 1.6% above analysts’ consensus estimates.

Company Overview

Originally known as Morgan Stanley Capital International before becoming independent in 2007, MSCI (NYSE:MSCI) provides critical decision support tools, indexes, and analytics that help global investors understand risk and return factors and build more effective investment portfolios.

Financial exchanges and data providers operate trading platforms and sell market information. They enjoy relatively stable revenue from trading fees and subscriptions, increasing demand for data analytics, and expansion opportunities in emerging markets. Challenges include regulatory oversight of market structure, competition from alternative trading venues, and substantial technology investments needed to maintain low-latency trading infrastructure and data security.

MSCI's primary competitors include S&P Dow Jones Indices (a joint venture of S&P Global and CME Group), FTSE Russell (owned by London Stock Exchange Group), and Bloomberg in the index space. In analytics, the company competes with BlackRock Solutions, FactSet, and Axioma (part of SimCorp), while its ESG offerings face competition from Sustainalytics (owned by Morningstar), ISS (majority owned by Deutsche Börse), and Moody's.

A company’s long-term sales performance can indicate its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Luckily, MSCI’s revenue grew at a solid 13.1% compounded annual growth rate over the last five years. Its growth beat the average financials company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. MSCI’s annualized revenue growth of 11.3% over the last two years is below its five-year trend, but we still think the results suggest healthy demand. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, MSCI’s year-on-year revenue growth was 10.6%, and its $822.5 million of revenue was in line with Wall Street’s estimates.

Revenue growth is one major determinant of business quality, and the efficiency of operations is another. For Financial Exchanges & Data companies, we look at pre-tax profit rather than the operating margin that defines sectors such as consumer, tech, and industrials.

Interest income and expenses play a big role in financial institutions' profitability, so they should be factored into the definition of profit. Taxes, however, should not as they are largely out of a company's control. This is pre-tax profit by definition.

Over the last five years, MSCI’s pre-tax profit margin has fallen by 7.2 percentage points, going from 42% to 47.7%. However, the company gave back some of its expense savings as its pre-tax profit margin declined by 6.5 percentage points on a two-year basis.

MSCI’s pre-tax profit margin came in at 47.3% this quarter. This result was 1.6 percentage points worse than the same quarter last year.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

MSCI’s EPS grew at a remarkable 17.2% compounded annual growth rate over the last five years, higher than its 13.1% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For MSCI, its two-year annual EPS growth of 13.1% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q4, MSCI reported adjusted EPS of $4.66, up from $4.18 in the same quarter last year. This print beat analysts’ estimates by 1.7%. Over the next 12 months, Wall Street expects MSCI’s full-year EPS of $17.30 to grow 12%.

Return on equity, or ROE, quantifies bank profitability relative to shareholder equity - an essential capital source for these institutions. Over extended periods, superior ROE performance drives faster shareholder wealth compounding through reinvestment, share repurchases, and dividend growth.

Over the last five years, MSCI has averaged an ROE of negative 143%, a bad result not only in absolute terms but also relative to the majority of firms putting up 25%+. It also shows that MSCI has little to no competitive moat.

The debt-to-equity ratio is a widely used measure to assess a company's balance sheet health. A higher ratio means that a business aggressively financed its growth with debt. This can result in higher earnings (if the borrowed funds are invested profitably) but also increases risk.

If debt levels are too high, there could be difficulties in meeting obligations, especially during economic downturns or periods of rising interest rates if the debt has variable-rate payments.

MSCI currently has $6.31 billion of debt and $2.65 billion of shareholder's equity on its balance sheet, and over the past four quarters, has averaged a debt-to-equity ratio of negative 3.8×. We think this is safe and raises no red flags. In general, we’re comfortable with any ratio below 3.5× for a financials business.

Revenue was just in line, and EPS managed to beat by a bit. Overall, there wasn't too much to get excited about this quarter. Investors seem to be hoping for more, and shares traded down 3.5% to $561.66 immediately following the results.

Updated: January 28, 2026 at 7:08 AM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in MSCI.

MSCI isn’t a terrible business, but it doesn’t pass our quality test. Although its revenue growth was solid over the last five years, it’s expected to deteriorate over the next 12 months and its relatively low ROE suggests management has struggled to find compelling investment opportunities.

MSCI’s P/E ratio based on the next 12 months is 30x. This valuation tells us it’s a bit of a market darling with a lot of good news priced in - we think there are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $660.40 on the company (compared to the current share price of $561.66).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.