Morningstar (MORN)

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See all 5 Bulls Reasons Bulls: Reasons To Buy Good revenue growth across all areas of the company, with potential for margin expansion 100% agree Good revenue growth across all areas of the company, with potential for margin expansion The company has divided its revenues into three primary categories. The Individual Segment encompasses the well known mutual fund service served to consumers through the companies website. This segment received revenues of 23.7m last quarter primarily through premium... read more View or Edit Reason 2 votes 100% agree Great potential to expand internationally 100% agree Great potential to expand internationally While the company is known for its expertise in domestic mutual funds, international expansion has grown to the point it is now more than 20% of revenue. The potential to serve emerging markets is incredible as investors are craving strong quality research products in this... read more View or Edit Reason 1 votes 100% agree "Good revenue growth across all areas of the company, with potential for margin expansion" 0% agree "Good revenue growth across all areas of the company, with potential for margin expansion" The company has divided its revenues into three primary categories. The Individual Segment encompasses the well known mutual fund service served to consumers through the companies website. This segment received revenues of 23.7m last quarter primarily through premium... read more View or Edit Reason 0 votes 0% agree See all Bears Reasons Bears: Reasons To Sell Dependance on Wall Street 100% agree Dependance on Wall Street Currently, Morningstar receives a good bit of business from major wall street firms who purchase research. The agreements are a result of lawsuits back in 2004 and as part of the settlement, companies such as Merrill Lynch and SmithBarney are required to offer their clients... read more View or Edit Reason 1 votes 100% agree Send the authors a comment or suggestion Be the first to make a suggestion See All Suggestions

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[edit] Business

[edit] Financials

The company grew revenues to $125.4 million which is 31.4% higher than last year. Their profitability was equally impressive with net income coming in at 47 cents per share compared to 33 the year before. Management noted that the results were driven by strength in investment consulting as well as the licensed data it sells to subscribers.

After accounting for acquisitions over the last year, organic growth was only 17.4%. Currency translation also benefited the headline revenue number as the company has grown international sources of revenue. In fact, overseas revenue now accounts for about 25% of total revenue which is a testament to the diversification efforts of management.

At this point, the balance sheet is still very strong with $215 million in cash and investments. On the liability side there is no long-term debt which will give them flexibility to not only ride out a weak economic period, but enables them to take advantage of the situation by making long-term investments in new acquisition targets at a time when prices for these companies are very low.

[edit] Trends and Forces

[edit] Acquisitions

The most recent major acquisition was a purchase of Hemscott and although this new company may not have as much in the way of additional revenue, Morningstar is getting a very attractive India data center which it should be able to leverage by storing more of its company-wide information in this centralized location. Hopefully this will lead to cost cutting measures which will improve the efficiency of the entire operation.

 Morningstar

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	Select All  |  Select None Companies Janus Capital Group (JNS) American Physicians Service Group (AMPH) Brookfield Asset Management (BAM) BlackRock (BLK) Calamos Asset Management (CLMS) Cohn & Steers (CNS) Epoch Holding (EPHC) Evercore Partners (EVR) FirstCity Financial (FCFC) Federated Investors (FII) GSC Investment (GNV) U.S. Global Investors (GROW) International Assets Holding (IAAC) MCF (MEM) Morningstar (MORN) Principal Financial Group (PFG) Piper Jaffray Companies (PJC) Penson Worldwide (PNSN) Resource America (REXI) Sanders Morris Harris Group (SMHG) Value Line (VALU) Westwood Holdings Group (WHG) W.P. Stuart (WPL) T. Rowe Price Group (TROW) Blackstone Group (BX) AllianceBernstein Holding L.P. (AB) Franklin Resources (BEN) Ameriprise Financial, Inc. (AMP) Affiliated Managers Group (AMG) Eaton Vance (EV) Lazard (LAZ) Cancel

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Company	Data From	Revenue	Net Income	Asset Net inflows	Management
AllianceBernstein Holding L.P. (AB)	2007	$4.72B	$1.26B	$32.2B	$3.39B
Blackstone Group (BX)	2007	$3.05B	$1.62B	Add	$1.57B
Janus Capital Group (JNS)	2007	$1.12B	$116M	$9.8B	$917M
Morningstar (MORN)	2007	$435M	$73.9M	Add	$435M

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[edit] References

1. ↑ ^{1.0 1.1 1.2} AB, 2007 10-K, Item 6, Pg 30
2. ↑ AB, 2007 10-K, Item 6, Pg 34-35
3. ↑ ^{3.0 3.1 3.2} BX, 2007 10-K, Item 6, Pg 45
4. ↑ ^{4.0 4.1} JNS, 2007 10-K, Item 6, Pg. 13
5. ↑ JNS, 2007 10-K, Item 7, Pg. 15
6. ↑ JNS, 2007 10-K, Item 8, Pg. 34
7. ↑ ^{7.0 7.1 7.2} MORN, 2007 10-K, Item 8, Pg. 80