Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Morgan Stanley's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from -33.6% to 18.8% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 413, DPO 14736, DIO 60). At a 9.1% WACC with mid-year discounting, the terminal value (40% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 21.0x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $767.01 per share, suggesting MS is undervalued by 367.0% at the current price of $164.26.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 4,965 | 5,231 | 5,510 | 6,210 | 7,376 | 7,560 |
| (−) Net Interest | 23,129 | 24,367 | 25,668 | 28,930 | 34,361 | 35,220 |
| (+) D&A | 3,032 | 3,140 | 3,126 | 3,076 | 3,097 | 3,174 |
| EBITDA | 31,126 | 32,738 | 34,304 | 38,216 | 44,834 | 45,955 |
| (−) Tax | 1,104 | 1,163 | 1,226 | 1,381 | 1,641 | — |
| (−) CapEx | 2,851 | 3,004 | 3,165 | 3,567 | 4,236 | — |
| (−) ΔWC | -552,670 | -45,681 | -48,010 | -120,362 | -200,396 | — |
| Free Cash Flow (FCF) | 579,840 | 74,252 | 77,924 | 153,631 | 239,353 | — |
| Peers' EBITDA Multiple | 21.0x | |||||
| Terminal Value | 966,884 | |||||
| WACC / Discount Rate | 9.05% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 555,264 | 65,205 | 62,752 | 113,453 | 162,092 | 627,030 |
| Enterprise Value | 1,585,795 | |||||
| Projection Period | 958,766 | 60.5% | ||||
| Terminal Value | 627,030 | 39.5% | ||||
| (−) Current Net Debt | 363,865 | |||||
| Equity Value | 1,221,930 | |||||
| (÷) Outstanding Shares | 1593M | |||||
| Fair Price | $767 | +367.0% | ||||
| WACC \ EV/EBITDA Exit Multiple | 17.0x | 19.0x | 21.0x | 23.0x | 25.0x |
|---|---|---|---|---|---|
| 7.0% | $743 | $784 | $825 | $866 | $907 |
| 8.0% | $717 | $756 | $795 | $834 | $874 |
| 9.0% | $692 | $730 | $767 | $804 | $842 |
| 10.0% | $669 | $704 | $740 | $776 | $812 |
| 11.0% | $646 | $680 | $714 | $749 | $783 |
Current price: $164.26. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.