Signal Ledger LabSignal Ledger valuation · MS
Morgan Stanley
What the shares are worth today on our research (management’s own targets for each business): every line valued at the end of FY2030, net debt rolled forward, then discounted back to Jun 30, 2026.
- Business value at FY2030
- $294B
- FY2030 net income
- $21B
- FY2030 EPS · P/E
- $13.51 · 14×
- Discount rate (WACC · equity)
- 9.61% · 9.61%
Latest quarter in this research: Q3 2026
Reported Oct 14, 2026 for the quarter to Sep 30, 2026 (company release ↗). This valuation already reflects these results (researched Oct 23, 2026).
| Segment | Revenue | vs a year ago | Operating income | Margin |
|---|---|---|---|---|
| Institutional Securities | $10.0B | +18% | — | — |
| Wealth Management | $9.06B | +10% | — | — |
| Investment Management | $1.46B | −12% | — | — |
| Intersegment eliminations | −$0.21B | — | — | — |
- Reported pretax income after funding costs/provisions was $6.478B; operatingIncomeB is null because bank pretax income is not industrial EBIT. Source: https://www.sec.gov/Archives/edgar/data/895421/000089542126000288/a3q26msearningsrelease.htm
- Firm ROTCE22.6%; Wealth pretax margin 30.4%; fee-based flows 80.5B.
- Supplement September TCE84.465B and actual shares 1565M are newer, but no complete September cash balance is disclosed in the release/supplement; June equity and shares remain paired.
What each business is worth
| Business | Model | FY2030 revenue | Value today | Per share | 2030 multiple | Value from beyond FY2030 |
|---|---|---|---|---|---|---|
| Morgan Stanley (firm-wide)Financial services | Return on equity (residual income) | — | $240B | $152.55 | 2.6× P/B | 38% |
| All businesses | — | $240B | $152.55 |
From 2030 back to today
- Enterprise value at end of FY2030$294B
- Less net debt at FY2030$0B
- Equity value at FY2030$294B
- ÷ (1 + 9.61%)^4.5 years at the cost of equity$195B
- + dividends paid on the way, discounted$45B
This reconciliation checks the published Signal Ledger valuation against the net-debt path. The difference is 0.0%, inside our 5% tolerance.
From businesses to one share
- All businesses, valued today$240B
- − borrowings$0B
- − finance leases$0B
- + cash and short-term investments$0B
- ÷ diluted shares1.571B
- Signal Ledger valuation$152.55
Valued on common equity: a financial company's deposits, borrowings, cash and preferred stock are part of the balance sheet it earns its return on, so they are not deducted again.
Year by year to FY2030
| Fiscal year | Revenue | EBITDA | Capex | Free cash flow | Net debt at year end |
|---|---|---|---|---|---|
| FY2026 | $0B | $23B | $0B | $12B | $0B |
| FY2027 | $0B | $24B | $0B | $12B | $0B |
| FY2028 | $0B | $25B | $0B | $13B | $0B |
| FY2029 | $0B | $26B | $0B | $13B | $0B |
| FY2030 | $0B | $27B | $0B | $14B | $0B |
What must be true
- The company spends $0.0B of capital expenditure through FY2030.
- The company stays net cash throughout (lowest point $0.0B of net cash in FY2025).
- Morgan Stanley (firm-wide) moves its return on equity from 21.6% to 20.0% by FY2030, against a 9.61% cost of equity.
What the price implies
Joint sales and margin requirements do not apply to this financial model.
At the research price of $183.97 (2026-10-23), the price asks more than our assumptions overall. These are operating requirements at that price, not additional valuations or forecasts.
- Implied discount rate
- 8.5%
- All-business FY2030 sales factor
- —
The WACC that makes model value equal the price, shifting WACC and cost of equity by the same amount. Model: 9.6% WACC · 9.6% cost of equity.
This model has no margin or capacity revenue paths to scale. FY1 stays fixed; the sales change ramps to FY2030 and stays at that factor thereafter.
Single-business sales and margin comparisons do not apply to asset, financial, project or REIT valuation lines.
Mechanical requirements, not forecasts. The separate sales-only and single-business factors are searched from 0.1× to 6×; an unsolved comparison means this business alone cannot get there within those bounds. Single-business revenue changes apply from FY2 onward; margin changes scale the full EBIT or EBITDA margin path. Mixed groups show revenue-weighted EBIT and EBITDA margins separately. Requirements above 100% are not feasible margins. Joint rows instead search non-negative uniform margin factors only up to the EBIT/EBITDA guardrails; the entire margin path scales, including post-FY2030 convergence. Sales and margins change together only in that table. The rate search runs from the largest terminal growth rate plus 0.5 percentage points to 30% WACC.
The discount rate
- Cost of equity
- 9.61%
- WACC
- 9.61%
- 10-year Treasury · model / spot
- 3.87% · 5.13%
r_f 3.87% (5-year average 10-year Treasury yield 3.87% (spot 5.13% on 2026-10-21)) + β 1.15 after Blume adjustment × 5%, rounded to 0.01% (1bp)
methodology §4.5: market-weighted WACC, not rounded
The model uses the recorded 5-year average Treasury yield. The spot yield is shown for context.
Every input, with its source
Show 13 inputs · reported, guidance and rule-based
| Input | Value | Basis | Why |
|---|---|---|---|
| Common equityMorgan Stanley (firm-wide) | $83.6B | Reported | June ending common 106.579B less goodwill/intangibles 22.977B =83.602B TCE. Preferred 9.750B already removed; evidence raw 116.329B total equity is not common. sec.gov ↗ |
| Return on equity FY2026Morgan Stanley (firm-wide) | 21.6% | Reported | FY2025 common earnings 16.249B / average monthly TCE75.124B =21.6296%, reported rounded 21.6%. Match the ROTCE target basis. sec.gov ↗ |
| Return on equity FY2030Morgan Stanley (firm-wide) | 20.0% | Guidance | straight line to the 20.0% FY2029 target, then held (methodology §4.6) morganstanley.com ↗ |
| Payout ratioMorgan Stanley (firm-wide) | 66.0% | Reported | FY2025 common repurchases 4.585B + common dividends 6.147B / common earnings 16.249B =66.0471%. No future share-count decline assumed. sec.gov ↗ |
| Terminal growthMorgan Stanley (firm-wide) | 2.0% | Rule | methodology §4.2 terminal growth for a mature line Valuation methodology §4.2 · Read methodology ↗ |
| WACCDiscount rates | 9.61% | Rule | methodology §4.5: market-weighted WACC, not rounded FRED DGS10 2021-10-20..2026-10-21 |
| Cost of equityDiscount rates | 9.61% | Rule | r_f 3.87% (5-year average 10-year Treasury yield 3.87% (spot 5.13% on 2026-10-21)) + β 1.15 after Blume adjustment × 5%, rounded to 0.01% (1bp) 60 monthly returns vs SPY, 2021-09..2026-09 (adjusted closes) |
| Tax rateDiscount rates | 22.5% | Reported | FY2025 reported effective tax 22.5%; after-tax common ROTCE determines value. No current FY effective-rate guidance identified. sec.gov ↗ |
| Cash and short-term investmentsBalance sheet | $0.0B | Reported | cash: inside the common equity the financial line is valued on (methodology §3.7) balance sheet 2026-06-30 |
| BorrowingsBalance sheet | $0.0B | Reported | borrowings and deposits: inside the common equity the financial line is valued on (methodology §3.7) balance sheet 2026-06-30 |
| Finance leasesBalance sheet | $0.0B | Reported | finance leases: inside the common equity the financial line is valued on (methodology §3.7) balance sheet 2026-06-30 |
| SharesBalance sheet | 1.571B | Reported | shares outstanding as of 2026-07-31 cover page of 10-Q 0000895421-26-000212 |
| Dividends per yearShareholders | $0.0B | Rule | Financial distributions already include common dividends and buybacks; disable the separate dividend add-on.: paid out of the financial line's earnings at its payout ratio (methodology §3.7) sec.gov ↗ |
Research notes
- share-count comparison: 1.569B quarter 2026-04-01..2026-06-30 · 0000895421-26-000212; point-in-time denominator retained
- valued on common equity (financial lines): cash, borrowings, deposits and preferred are inside it, not deducted again; dividends come from the payout ratio
- cost of equity 9.61% (β 1.15 after Blume adjustment), WACC 9.6%
- Morgan Stanley (firm-wide): residual income on $83.6B of common equity, earnings = ROE × equity, payout 66% (methodology §3.7)
Signal Ledger research under one stated scenario — management's targets are delivered — not a forecast that they will be and not investment advice. The research desk (GPT-6.1 (Codex)) gathers filings, guidance and targets; deterministic code applies the samepublished rules to every company and checks the result. Inputs may contain errors; follow the source links before relying on them. Read our valuation methodology →