Morningstar, Inc. (NASDAQ:MORN) is a provider of independent investment research to investors worldwide.
The Company divides its business operations into three segments:
• Individual, which focuses on products and services for individual investors;
• Advisor, which focuses on products and services for financial advisers;
• Institutional, which focuses on products and services for institutional clients, including banks, brokerage firms, insurance companies, mutual fund companies, media outlets, and retirement plan providers and sponsors.
Morningstar maintains a series of databases on eight types of investments used by investors. As of December 31, 2005, the Company provided data on more than 17,800 mutual fund share classes in the United States; 43,000 mutual funds and similar vehicles in international markets; 7,100 stocks; 2,600 hedge funds; 4,800 separate accounts; 50,200 variable annuity/life sub-accounts; 200 exchange-traded funds; 600 closed-end funds, and 80 college savings plans.
FUNDAMENTALS: Morningstar is a company that bled money for several years before finally becoming profitable in 2004. Since that time, the company hasn't looked back. Earnings more than tripled in '05 and will end up with another surge of 60 - 70% in 2006 once the company reports 4th quarter '06 results on Thursday. 2007 earnings estimates call for an increase in the neighborhood of 35%. One key characteristic that I look for in companies that could become the next home run are rising margins and ROE. This is the case for Morningstar. In addition, management must believe in the company because it has money on the line with 80% ownership. All the fundamental characteristics are there for Morningstar to be big winner.
TECHNICAL: The stock broke out from a base today to a new all time high today. Although relative strength lags a bit with a score of 62/100, a high volume move into record territory is extremely bullish. Perhaps this move before earnings is forecasting a trouncing of estimates on Thursday morning. We shall see.
A view of the weekly chart of Morningstar shows a break to new all time high.
Full Disclosure/Disclaimer: Author has no position in above-mentioned company.