Morningstar – which just went public last year, serves 185,000 financial advisors and 750 institutional clients through operations in 16 countries -- should continue to ramp up its product suite, attract new subscribers, and benefit from the contagious Wall St trend, post-Spitzer, to pay for independent 3rd party research. ROIC-infatuated and Graham-driven value hedge fund managers, moreover, cherish Morningstar’s differentiated research and we think Morningstar’s success is directly correlated with the fact that hedge fund assets have doubled to $1.43 trillion dollars over the last 5 years.
Although shares currently look rich at 51x trailing 12 EPS, analysts have yet to revise estimates or pick up any substantial coverage on this exciting name, which carries $145M in cash & zero debt. We would be compelled to own MORN ahead of Q1 FY07 numbers, expected on May 4th. BetaCracker, which hones in on mid-caps undergoing both heavy accumulation & explosive top line/EPS growth, isolated Morningstar as a ‘best in show’ in the Publishing industry.
Disclosure: Author has no position in MORN.