Morningstar, Inc. (MORN) Passes This Key Test

Watching the trends
When that red line (AR growth) crosses above the green line (revenue growth), I know I need to consult the filings. Similarly, a spike in the blue bars indicates a trend worth worrying about. Morningstar, Inc. (NASDAQ:MORN)’s latest average DSO stands at 61.9 days, and the end-of-quarter figure is 62.8 days. Differences in business models can generate variations in DSO, and business needs can require occasional fluctuations, but all things being equal, I like to see this figure stay steady. So, let’s get back to our original question: Based on DSO and sales, does Morningstar look like it might miss its numbers in the next quarter or two?

I don’t think so. AR and DSO look healthy. For the last fully reported fiscal quarter, Morningstar, Inc. (NASDAQ:MORN)’s year-over-year revenue grew 5.0%, and its AR dropped 3.0%. That looks OK. End-of-quarter DSO decreased 8.7% from the prior-year quarter. It was up 1.8% versus the prior quarter. Still, I’m no fortuneteller, and these are just numbers. Investors putting their money on the line always need to dig into the filings for the root causes and draw their own conclusions.

The article Morningstar Passes This Key Test originally appeared on Fool.com.

Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool recommends Morningstar.

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