Morningstar, Inc. (MORN): A Bull Case Theory

We came across a bullish thesis on Morningstar, Inc. (MORN) on Flyover Stocks’ Substack. In this article, we will summarize the bulls’ thesis on MORN. Morningstar, Inc. (MORN)’s share was trading at $304.12 as of 23^rd May. MORN’s trailing and forward P/E were 34.13 and 30.77 respectively according to Yahoo Finance.

Morningstar, while widely respected among investors, remains relatively under the radar compared to peers like FactSet or S&P Global due to its modest analyst coverage and low stock liquidity driven by significant insider ownership. Founded in 1984 by Joe Mansueto, who still owns 35% and serves as executive chairman, Morningstar began as a simple mutual fund data aggregator, capitalizing on the cumbersome process investors faced in gathering fund information in the 1980s. Its name and iconic rising sun logo, designed by renowned minimalist Paul Rand, symbolize its mission to illuminate the opaque financial industry.

Morningstar’s early focus on mutual funds evolved into a comprehensive suite of financial data and analytics services, which now span global markets. Since going public in 2005, Morningstar has outperformed both the Nasdaq 100 and S&P 500 on total returns, embodying classic Flyover Stock traits with a strong moat rooted in its proprietary, license-based Data & Analytics segment. This core segment, generating an estimated $224 million in 2024 through products like Morningstar Direct and proprietary metrics such as the Morningstar Style Box, serves institutional clients including asset managers and RIAs and faces competition from Bloomberg, FactSet, and others.

Despite over four decades of success, Morningstar faces fresh challenges and opportunities in a rapidly evolving data landscape. With a $12.7 billion market cap and a 33x forward P/E, it remains a relatively overlooked gem with a strong foundation in deep financial data and analytics, supported by a visionary founder and focused management. The company’s steady growth and economic moat position it well for continued relevance amid increasing demand for transparent, comprehensive investment data.

Morningstar, Inc. (MORN) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 41 hedge fund portfolios held MORN at the end of the first quarter which was 33 in the previous quarter. While we acknowledge the risk and potential of MORN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MORN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.