Editor's note: The numbers for asset-based fees and recurring subscriptions have been corrected in this article.

What happened

MSCI (MSCI -1.20%) saw its stock price climb 18.3% higher this week from last Friday's close through the closing bell today, according to S&P Global Market Intelligence. The stock is down about 22% year to date, trading at $474 per share.

MSCI outperformed the major indexes this week. The Dow Jones Industrial Average was up 5.7%, the S&P 500 climbed 3.9%, and the Nasdaq gained 2.2% this week from last-Friday's close.

So what

MSCI is most well known as one of the largest providers of stock market indexes but also offers analytics and investment research to institutional investors. The major catalyst for its climb this week was its third-quarter earnings report, which beat earnings estimates.

MSCI reported an 8.4% increase year over year in operating revenue to $561 million and a 10.5% increase in operating income to $309 million. The company increased its operating margin to 55.2% from 54.2% a year ago this quarter. Adjusted earnings per share was $2.85, up 12.6% from a year ago.

MSCI has two major revenue streams: recurring subscriptions and asset-based fees. The recurring subscriptions come from its analytics, ESG (environmental, social, and governance) research, and licensing its indexes. Its asset-based fees come primarily from clients who use the indexes for index-linked products, so they fluctuate based on assets under management.

The asset-based fees were down 11.4% year over year, while the recurring subscriptions were up 17.5% year over year. Deutsche Bank analyst Faiza Alwy raised her price target from $423 to $459 on the stronger-than-expected earnings.

Now what

MSCI had its best third quarter ever for recurring net new sales, which speaks to the strength of its business model. Obviously, when markets are up, MSCI will thrive as asset levels rise and more people are investing. But in down markets like this, the company's subscriptions tend to perform well as institutional investors seek out its research and analytics.

According to Chairman and CEO Henry Fernandez:

In the face of significant market turmoil, MSCI once again delivered strong results, including our best third quarter ever of recurring net new sales. Among other achievements, we posted our highest Index subscription run rate growth in a decade at 12.6%, grew our Climate business subscription run rate by 86% and posted our highest Analytics retention rate ever at 95.9%. We did this even as global headwinds grew stronger, demonstrating the resilience and adaptability of our all-weather franchise.

I like this stock a lot, although its valuation is a bit high with a forward price-to-earnings (P/E) ratio of 36. This is down from 54 a year ago this quarter, but still on the high side.

The company's high margins, excellent cash flow and sturdy cash balances, along with its steady, stable income in various market conditions, make it a stock to consider in any cycle. But it might be a good idea to wait until that valuation comes down a bit.