Analyzing Morningstar Inc’s (NASDAQ:MORN) track record of past performance is a valuable exercise for investors. It enables us to reflect on whether or not the company has met expectations, which is a powerful signal for future performance. Today I will assess MORN’s recent performance announced on 30 September 2017 and compare these figures to its long-term trend and industry movements. View our latest analysis for Morningstar
Did MORN beat its long-term earnings growth trend and its industry?
For the most up-to-date info, I use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This allows me to assess different stocks in a uniform manner using the most relevant data points. “For Morningstar, its “, most recent twelve-month earnings is $168.3M, which, in comparison to the prior year’s figure, has jumped up by 31.48%. Given that these values are relatively short-term, I have determined an annualized five-year value for MORN’s earnings, which stands at $114.9M. This suggests that, generally, Morningstar has been able to consistently grow its net income over the past couple of years as well.
What’s enabled this growth? Let’s take a look at if it is only due to an industry uplift, or if Morningstar has experienced some company-specific growth. In the past couple of years, Morningstar increased its bottom line faster than revenue by efficiently controlling its costs. This brought about a margin expansion and profitability over time. Scanning growth from a sector-level, the US capital markets industry has been growing its average earnings by double-digit 17.00% in the prior year, and 10.45% over the past five years. This means any tailwind the industry is deriving benefit from, Morningstar is capable of amplifying this to its advantage.
What does this mean?
Though Morningstar’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Morningstar gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Morningstar to get a better picture of the stock by looking at:
1. Financial Health: Is MORN’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
2. Valuation: What is MORN worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether MORN is currently mispriced by the market.