MSCI: Even Quality Can Become Too Expensive
November 9, 2022
Summary
- On October 25, MSCI reported quite strong 9M numbers and, for the moment, defended its high multiples (LTM P/E about 44).
- In this article, I focus on a high-level valuation of MSCI to decide if it’s worth analyzing the stock in more detail.
- Using a standard DCF-WACC model, market data for interest rates, and reasonable estimates for future fundamentals suggests massive overvaluation (theoretical downside of 54%).
- The result is very similar when comparing MSCI to common valuation multiples of a peer group. Depending on the multiple, the company trades at a premium of up to 60%.
- MSCI is undeniably a very high-quality company. But at the current levels, the company just appears way too expensive. So I am not yet interested.
- SA #18: RPV – ‘Pure Value’ Is Indeed More Value Than ‘Value’
- SA #17: IUSV – Transparent Value With Modest Active Risk
- SA #16: IWD – Low Growth Is Not Necessarily Value – Also For Large Caps
- SA #15: VLUE – Transparent Value With Little Industry Bets
This content is for educational and informational purposes only and no substitute for professional or financial advice. The use of any information on this website is solely on your own risk and I do not take responsibility or liability for any damages that may occur. The views expressed on this website are solely my own and do not necessarily reflect the views of any organisation I am associated with. Income- or benefit-generating links are marked with a star (*). All content that is not my intellectual property is marked as such. If you own the intellectual property displayed on this website and do not agree with my use of it, please send me an e-mail and I will remedy the situation immediately. Please also read the Disclaimer.