Morningstar (MORN) AI Stock Analysis

• Market Cap: $12.64B
• Dividend Yield: 0.61%
• Average Volume (3M): 172.15K
• Price to Earnings (P/E): 33.6
• Beta (1Y): 0.88
• Revenue Growth: 10.11%
• EPS Growth: 79.71%
• Country: US
• Employees: 11,115
• Sector: Financial
• Sector Strength: 73
• Industry: Financial - Data & Stock Exchanges
• EPS (TTM): 2.23
• Shares Outstanding: 42,249,190
• 10 Day Avg. Volume: 169,342
• 30 Day Avg. Volume: 172,154
• PEG Ratio: -2.07
• Price to Book (P/B): 7.64
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 54.82
• Enterprise Value/Market Cap: 0.81
• Enterprise Value/Revenue: 1.13
• Enterprise Value/Gross Profit: 7.51
• Enterprise Value/Ebitda: 3.82
• 1Y Price Target: $352.50
• Price Target Upside: 17.85% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2

• Rating: 77 Outperform
• Price Target: $344.00 ▲(15.00%Upside)

Morningstar's strong financial performance and strategic investments in AI and analytics are key strengths, despite a high P/E ratio indicating potential overvaluation. Technical indicators show mixed momentum, but recent corporate events suggest positive long-term growth prospects.

Positive Factors

Growth Strategy

Management believes that over time, they can continue to deliver margin expansion, suggesting a bullish outlook.

Innovation

Many clients are using AI and it should drive growth of Morningstar datasets and IP.

Partnerships

Morningstar signed a partnership with SS&C's Black Diamond Wealth platform - the first to integrate with Direct Advisory Suite.

Negative Factors

Economic Conditions

Management noted facing a more challenging macro in the US, particularly in corporate client segment.

Market Dynamics

Data and Analytics slowing growth attributed to a variety of factors.

Morningstar Business Overview & Revenue Model

Company Description

Morningstar, Inc. is a leading provider of independent investment research and financial services. Founded in 1984 and headquartered in Chicago, Illinois, Morningstar operates in the financial services sector, offering a comprehensive suite of products and services designed to assist investors in making informed decisions. The company provides data, research, and analysis tools across various asset classes, including stocks, mutual funds, and exchange-traded funds (ETFs). Morningstar caters to individual investors, financial advisors, asset managers, and institutional clients globally.

How the Company Makes Money

Morningstar makes money through a diversified revenue model primarily driven by subscriptions, licenses, and asset-based fees. Key revenue streams include the sale of investment research, data services, and software products to financial professionals and institutions. The company offers subscription-based platforms like Morningstar Direct, Morningstar Advisor Workstation, and Morningstar Office, which provide valuable analytics and portfolio management tools. Additionally, Morningstar generates revenue from its investment management services, where it earns fees based on assets under management. Significant partnerships with financial institutions and mutual fund companies also contribute to its earnings, as these entities rely on Morningstar's ratings and research to enhance their investment offerings.

Morningstar Financial Statement Overview

Summary

Morningstar exhibits strong financial health with consistent revenue growth of over 16%, solid profitability with a net profit margin of 16.62%, and efficient cash flow management despite a slight increase in debt levels.

Income Statement

Morningstar demonstrated strong revenue growth with a revenue growth rate of 16.63% from 2023 to TTM, and 21.52% from 2022 to 2023. The company also maintained solid profitability, with a gross profit margin of 58.58% for TTM, and a net profit margin of 16.62%. However, there is a slight decrease in gross profit margin compared to the previous year, indicating a marginal increase in cost structure.

Balance Sheet

The balance sheet reflects a moderate debt-to-equity ratio of 0.62, indicating a reasonable level of leverage. Return on Equity (ROE) improved significantly to 23.87% in TTM, showcasing strong returns for shareholders. The equity ratio stands at 44.89%, suggesting a solid equity base. However, the total debt has increased, which could pose potential risk if not managed properly.

Cash Flow

Operating cash flow remains robust, with a free cash flow to net income ratio of 1.17 in TTM, indicating efficient cash generation relative to net income. The free cash flow growth rate is 127.14% from 2023 to TTM, showing substantial improvement in cash reserves. The operating cash flow to net income ratio is 1.53, further supporting strong cash flow generation. However, capital expenditures are still significant, which could impact free cash flow if not optimized.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
2.31B	2.28B	2.04B	1.87B	1.70B	1.39B
	Gross Profit
1.35B	1.38B	1.20B	1.09B	1.00B	833.10M
	EBIT
509.90M	484.80M	230.60M	167.80M	257.00M	215.20M
	EBITDA
739.30M	714.20M	419.70M	323.70M	417.00M	433.90M
	Net Income Common Stockholders
384.20M	369.90M	141.10M	70.50M	193.30M	223.60M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
511.50M	551.00M	389.00M	414.60M	546.10M	464.20M
	Total Assets
3.59B	3.55B	3.40B	3.47B	2.86B	2.70B
	Total Debt
1.00B	904.00M	1.16B	1.32B	531.50M	626.70M
	Net Debt
491.60M	401.30M	822.30M	947.00M	47.70M	204.20M
	Total Liabilities
1.98B	1.93B	2.08B	2.27B	1.45B	1.42B
	Stockholders Equity
1.61B	1.62B	1.33B	1.21B	1.42B	1.27B
Cash Flow		Free Cash Flow
448.20M	448.90M	197.30M	168.30M	348.10M	307.60M
	Operating Cash Flow
589.00M	591.60M	316.40M	297.80M	449.90M	384.30M
	Investing Cash Flow
-65.30M	-21.30M	-81.90M	-799.30M	-167.70M	-123.80M
	Financing Cash Flow
-365.00M	-384.40M	-278.40M	415.10M	-211.80M	-182.20M

Morningstar Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 299.12
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MORN, the sentiment is Negative. The current price of 299.12 is below the 20-day moving average (MA) of 307.21, above the 50-day MA of 293.68, and below the 200-day MA of 317.18, indicating a neutral trend. The MACD of 1.60 indicates Positive momentum. The RSI at 44.54 is Neutral, neither overbought nor oversold. The STOCH value of 18.30 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MORN.

Morningstar Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MORN	77 Outperform	$12.64B	33.58	25.68%	0.61%	10.11%	79.71%
SPGI	74 Outperform	$153.81B	39.37	11.68%	0.77%	12.98%	42.72%
FDS	70 Outperform	$15.93B	29.84	28.12%	1.05%	4.66%	11.15%
MSCI	70 Outperform	$41.99B	37.32	-117.99%	1.33%	11.67%	-0.89%
VALU	70 Outperform	$353.10M	16.42	22.87%	3.46%	-6.56%	17.95%
Sector *	64 Neutral	$12.77B	9.71	7.85%	78.06%	12.07%	-7.97%
DNB	62 Neutral	$4.04B	―	-0.64%	2.21%	2.52%	42.27%

Morningstar Corporate Events

Morningstar Implements New Executive Severance Policy

On May 9, 2025, Morningstar, Inc. implemented a new Executive Severance Policy, offering severance benefits to its executive team, including the CEO, CFO, and CRO, in cases of termination without cause, death, or disability. The policy also outlines enhanced benefits in the event of a change in control. Additionally, Morningstar held its Annual Shareholders’ Meeting on the same day, where directors were elected, executive compensation was approved, and KPMG LLP was ratified as the independent registered public accounting firm for 2025.

The most recent analyst rating on (MORN) stock is a Buy with a $281.00 price target. To see the full list of analyst forecasts on Morningstar stock, see the MORN Stock Forecast page.

Morningstar Highlights AI Focus in Investor Q&A

Morningstar, Inc. released its Investor Q&A for questions received through March 31, 2025, highlighting its strategic focus on strengthening competitive positions and leveraging artificial intelligence to enhance product offerings. The company is addressing trends in the investment landscape by expanding data sets and creating tools to simplify customer workflows. Additionally, Morningstar is investing in data and analytics to drive operational scale and meet investor needs, while also managing increased corporate expenses due to higher compensation and marketing costs. The company’s strategy aims to maintain growth and deliver long-term value to shareholders amid changing economic conditions and regulatory landscapes.

Morningstar Reports Strong Q1 Revenue Growth

On April 30, 2025, Morningstar, Inc. reported a strong start to the year with first-quarter revenue growth of 7.2% to $581.9 million, driven by significant contributions from PitchBook and Morningstar Credit. The company also saw increases in operating income and margins, despite market volatility and economic uncertainty. Morningstar accelerated its stock repurchases and expanded its offerings through acquisitions, while facing challenges such as increased operating expenses due to compensation costs and the sunsetting of Morningstar Office.

Morningstar Addresses Investor Questions in New Report

Morningstar, Inc. released a report addressing investor questions received through March 31, 2025, highlighting its financial performance and strategic direction. In 2024, the company saw a significant increase in adjusted operating income, but also faced challenges such as a slowdown in organic revenue growth in its Data and Analytics segment and increased operating expenses due to higher compensation costs. The company is focusing on long-term margin expansion and aims to enhance its product offerings, including the launch of the Direct Advisory Suite in January 2025, to drive future growth.