MSCI (MSCI)

Investment analytics provider MSCI (NYSE:MSCI) met Wall Street’s revenue expectations in Q3 CY2025, with sales up 9.5% year on year to $793.4 million. Its non-GAAP profit of $4.47 per share was 2.3% 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. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Luckily, MSCI’s revenue grew at a solid 13% 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 12.5% over the last two years aligns with its five-year trend, suggesting its demand was predictably strong. 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 grew its revenue by 9.5% year on year, and its $793.4 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.

This is because for financials businesses, interest income and expense should be factored into the definition of profit but taxes - which are largely out of a company's control - should not.

Over the last four years, MSCI’s pre-tax profit margin has fallen by 6.4 percentage points, going from 41.7% to 48.1%. However, fixed cost leverage was muted more recently as the company’s pre-tax profit margin was flat on a two-year basis.

MSCI’s pre-tax profit margin came in at 50% this quarter. This result was in line with the same quarter last year.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

MSCI’s EPS grew at a remarkable 17.4% compounded annual growth rate over the last five years, higher than its 13% 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 15.1% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q3, MSCI reported adjusted EPS of $4.47, up from $3.86 in the same quarter last year. This print beat analysts’ estimates by 2.3%. Over the next 12 months, Wall Street expects MSCI’s full-year EPS of $16.82 to grow 10.8%.

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 146%, 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 $5.62 billion of debt and $1.92 billion of shareholder's equity on its balance sheet, and over the past four quarters, has averaged a debt-to-equity ratio of negative 4.4×. 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.

It was good to see MSCI beat analysts’ EPS expectations this quarter despite in line revenue. The stock remained flat at $546.70 immediately after reporting.

Updated: December 4, 2025 at 11:07 PM 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 29.1x. At this valuation, there’s a lot of good news priced in - we think other companies feature superior fundamentals at the moment.

Wall Street analysts have a consensus one-year price target of $657.56 on the company (compared to the current share price of $541).

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.