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

We came across a bullish thesis on Morningstar, Inc. on Rebound Capital’s Substack. In this article, we will summarize the bulls’ thesis on MORN. Morningstar, Inc.’s share was trading at $216.38 as of December 1st. MORN’s trailing and forward P/E were 24.62 and 19.19 respectively according to Yahoo Finance.

Morningstar, Inc. (MORN) is best known for its consumer-facing investment research, but the bulk of its revenue stems from premium data subscriptions sold to financial institutions. Its flagship platforms, Morningstar Direct (~$15K per year) and PitchBook (~$20K per year), are used by thousands of firms worldwide, providing recurring, high-margin revenue streams. Despite this, the company’s stock has fallen by 35% year-to-date, an unusual drawdown for a data subscription business with stable demand.

The decline followed weaker-than-expected Q4 2024 earnings, where operating expenses rose 10%—outpacing 9.7% revenue growth—due to higher compensation costs, squeezing margins and surprising investors. Although Q1 2025 results showed margin recovery, revenue growth decelerated to 7.2%, reflecting cautious spending across the financial sector amid macroeconomic concerns such as tariffs and a cooling labor market. Industry-wide headwinds, including reduced deal activity from elevated interest rates, have weighed on PitchBook’s performance, with peers like FactSet also down sharply.

Nevertheless, Morningstar remains a fundamentally strong business. Its subscription models ensure steady cash flow, and management’s disciplined cost controls have restored operating margins to roughly 23%. The company generates over $400 million in annual free cash flow and has increased its dividend for 16 consecutive years. The recent $375 million acquisition of CRSP expands its coverage into public markets, strengthening its data ecosystem. While there is no immediate catalyst for a sharp rebound, potential Fed rate cuts and a revival in deal activity could drive a re-rating, offering upside for long-term investors.

Previously we covered a bullish thesis on Morningstar, Inc. (MORN) by Flyover Stocks in May 2025, which highlighted the company’s strong moat, proprietary data platforms, and founder-led stability. The company’s stock price has depreciated approximately by 28.85% since our coverage. This is because the thesis didn’t fully play out amid margin pressures. The long-term thesis still stands as Morningstar’s recurring subscription model remains resilient. Rebound Capital shares a similar but emphasizes on valuation re-rating potential.

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Disclosure: None.