Morningstar helps investors and key decision-makers by providing research, data, and other financial information. Clients of Morningstar include financial advisors, asset managers, institutional investors, and retail investors. Morningstar’s equity research reports are widely used in the financial industry. The company is now also expanding its ESG offerings with the recent acquisition of Sustainalytics. Investors searching for the right financial stock to buy right now may want to consider companies like Morningstar. Such companies are not the most prominent names that come to mind when one talks about the financial services industry. However, the brand value and the economic moats that Morningstar brings can lead to sustainable long-term growth.
Morningstar Reports Q42020 Earnings
In February 2021, Morningstar reported its fourth-quarter 2020 earnings results. Revenues were $380 million for the quarter, up from $332 million achieved in Q42019. Operating income was up substantially from $40 million in Q42019 to $65 million in Q42020. Net income per diluted share was $1.74, up from $0.64 per share in Q42019. Other income for the quarter was up substantially from $1 million to $32 million. The gross margin was up from around 57.25% in the same quarter the prior year to 60.67% in Q42020. Net margins grew significantly as well, from approximately 8.3% to 19.8%. Based on the recent quarterly performance, Morningstar can potentially be a top financial stock to invest in.
The finance industry is going through some critical trends. Interest rates have been at historic lows for quite a few months as the pandemic has significantly affected the global economy. Recently, the 1-year US Treasury yields have been inching up. This could potentially be good news for lending businesses like big banks.
Morningstar’s stock has been on a steady uptrend throughout the last 12 months, almost doubling its price since April 2020. Over a 6-month period, the stock is up around 42%. However, unlike asset management companies, Morningstar does not trade at a high dividend yield. It was trading at a 0.56% yield on 26th March 2021.