Value Line Could Have Been Morningstar (VALU, MORN)

Mar. 27, 2006 6:45 AM ETMORN, VALU
Douglas McIntyre profile picture
Douglas McIntyre

As a matter of fact, Value Line (VALU) was Morningstar Inc. (MORN). Founded in 1931 by Arnold Bernhard, Value Line was one of the premier investment research firms in the country, selling the Value Line Investment Survey and spin-offs to everyone from high-end individual investors to mutual funds and institutions. The flagship product still covers 1,700 stocks every week.

In Value Line's fiscal third quarter, which ended January 31, the company had revenues of $21 million, little changed from a year earlier. For the nine month period, revenues were $63.5 million, little changed from a year earlier. For fiscal Q3 net income rose to $6.7 million for $4.7 million, but for the nine months the change was more modest rising to $17.7 million from $16.4 million last year.

Breaking down the top line, $12 million came from Value Line publications in Q3. Investment management fees for funds that Value Line manages were $8.2 million. Neither line-item moved much from the year before. License fees were small, and rounded out the revenue.

Over the years, Value Line has expanded its services to include mutual fund surveys, options and convertibles data, and a number of institutional products. Corporate and pension funds use Value Line Asset Management and the company earns fees from managing over $3 billion dollars, according to their 10K.

The company has a market cap of $360 million.

Let's turn to Morningstar for the purposes of a contrast. The company is much younger, and later to the investment advisory business, having been founded in 1984. Like Value Line, the company also markets stock, fund and exchange traded fund advisory services for individuals, investment advisors, and institutions.

For the year 2005, Morningstar did $227 million, up from $180 million in 2004. Year-over-year growth of its premium memberships and advisor workstations has been impressive. The company also has

This article was written by

Douglas McIntyre profile picture
Douglas A. McIntyre is the former Editor-in-Chief of Financial World Magazine. He has also been president of, which was at the time the 10th most visited website in the world, according to MediaMetrix. He has also been chief executive of both On2 Technologies, Inc. and FutureSource LLC. Doug's articles exhibit a rare combination that makes them an ideal fit for Seeking Alpha: he knows technology cold, has a sharp understanding of what's priced-in to stocks, and writes extremely well (as you'd expect). You can find them on the technology verticals in Seeking Alpha: Software, Hardware, Chips and Internet.

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