DCF Studio

    MSCI · NYQ · Financial Services

    MSCI Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 300.65

    Market price

    USD 552.87

    Implied upside

    -45.6%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Wrong toolThis is a financial. Banks and insurers report no meaningful operating income, and capex and working capital do not mean what a free-cashflow model assumes, so a DCF will misprice it. The model below runs on best-effort numbers - treat it as an illustration, not a valuation.

    Current EV/EBITDA of 23.8x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 300.65-45.6%
    Exit multiple
    USD 587.33+6.2%
    Market price
    USD 552.87

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn3bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 3.5bnUSD 3.9bnUSD 4.4bnUSD 4.9bnUSD 5.5bn+11.7%
    EBITUSD 1.9bnUSD 2.1bnUSD 2.4bnUSD 2.6bnUSD 3.0bn+11.7%
    NOPATUSD 1.6bnUSD 1.7bnUSD 2.0bnUSD 2.2bnUSD 2.4bn+11.7%
    Add depreciation & amortisationUSD 234.8mUSD 262.3mUSD 293.1mUSD 327.4mUSD 365.7m+11.7%
    Less capital expenditureUSD -131.4mUSD -146.8mUSD -163.9mUSD -183.1mUSD -204.6m+11.7%
    Less increase in working capitalUSD 3.2mUSD 3.6mUSD 4.0mUSD 4.5mUSD 5.0m-11.7%
    Free cashflow to firmUSD 1.7bnUSD 1.9bnUSD 2.1bnUSD 2.3bnUSD 2.6bn+11.7%
    Discount factor0.95200.86290.78210.70890.6425-
    Present valueUSD 1.6bnUSD 1.6bnUSD 1.6bnUSD 1.7bnUSD 1.7bn+1.2%
    Present Value Of The ForecastUSD 8.2bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.147Reported 1.219, pulled toward 1.0 (Blume)
    Cost of equity11.31%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 40.2bn86.4% of capital
    Total debtUSD 6.3bn13.6% of capital, book value as a proxy
    Tax rate17.4%Effective, capped at statutory
    WACC10.33%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 300.65

    72% of EV

    Forecast FCFF, final year
    USD 2.6bn
    Capex at depreciation, working capital in reinvestment
    USD 2.7bn
    Less reinvestment at g/ROIC (7.6% of NOPAT)
    USD -202.5m
    Capitalised
    USD 2.5bn
    ROIC (reported)
    32.9%
    Terminal value, undiscounted
    USD 32.2bn
    Terminal value, discounted
    USD 20.7bn
    Enterprise value
    USD 28.8bn
    Less net debt
    USD 5.8bn
    Equity value
    USD 23.0bn

    Exit at 20.0x EBITDA

    Value per shareUSD 587.33

    84% of EV

    Terminal value, undiscounted
    USD 66.4bn
    Terminal value, discounted
    USD 42.6bn
    Enterprise value
    USD 50.8bn
    Less net debt
    USD 5.8bn
    Equity value
    USD 45.0bn

    Spread between methods: 65%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    8.33%379.43402.45429.34461.21499.60
    9.33%320.85337.05355.57376.95401.95
    10.33%275.58287.38300.65315.69332.87
    11.33%239.55248.39258.20269.14281.44
    12.33%210.21216.97224.39232.58241.65

    Outlined: this model. Green text: above today's price of 552.87. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year11.7%25.1%+13.4pp
    EBIT margin54.2%93.5%+39.4pp
    Discount rate10.3%7.2%-3.1pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.