Here's Why We Think MSCI (NYSE:MSCI) Might Deserve Your Attention Today

Simply Wall St ·  Apr 14 10:45

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit.  Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals.  Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like MSCI (NYSE:MSCI). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

How Quickly Is MSCI Increasing Earnings Per Share?

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow.  Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS.   Shareholders will be happy to know that MSCI's EPS has grown 26% each year, compound, over three years.   If the company can sustain that sort of growth, we'd expect shareholders to come away satisfied.  

Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market.    MSCI maintained stable EBIT margins over the last year, all while growing revenue 12% to US$2.5b.  That's progress.  

The chart below shows how the company's bottom and top lines have progressed over time.  To see the actual numbers, click on the chart.

NYSE:MSCI Earnings and Revenue History April 14th 2024

You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for MSCI's future profits.

Are MSCI Insiders Aligned With All Shareholders?

Since MSCI has a market capitalisation of US$42b, we wouldn't expect insiders to hold a large percentage of shares.  But we are reassured by the fact they have invested in the company.     We note that their impressive stake in the company is worth US$1.3b.   Holders should find this level of insider commitment quite encouraging, since it would ensure that the leaders of the company would also experience their success, or failure, with the stock.  

Should You Add MSCI To Your Watchlist?

If you believe that share price follows earnings per share you should definitely be delving further into MSCI's strong EPS growth.   This EPS growth rate is something the company should be proud of, and so it's no surprise that insiders are holding on to a considerable chunk of shares.  The growth and insider confidence is looked upon well and so it's worthwhile to investigate further with a view to discern the stock's true value.     You still need to take note of risks, for example - MSCI has   1 warning sign  we think you should be aware of.  

There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a tailored list of  companies which have demonstrated growth backed by recent insider purchases.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Disclaimer: This content is for informational and educational purposes only and does not constitute a recommendation or endorsement of any specific investment or investment strategy. Read more
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