Curious what people here think about Morningstar — ticker MORN.
The thesis I’m playing with is that Morningstar is slowly becoming a much more institutional financial data, ratings, research, and indexing company. Not quite S&P Global, Moody’s, MSCI, or Fitch, but maybe something moving in that direction if they keep executing. The most interesting piece to me is DBRS / Morningstar Credit. The “Big Three” in credit ratings are obviously S&P, Moody’s, and Fitch, but DBRS gives Morningstar a credible fourth global ratings platform. I’m not saying DBRS is equal to Moody’s or S&P in scale, because it clearly isn’t. But in an industry where credibility, regulatory acceptance, issuer relationships, data, and long-term trust matter a lot, being the fourth real player seems valuable. There may also be a broader regulatory and market-structure angle here. Look at what has happened around FICO and mortgage credit scoring. The government seems increasingly interested in breaking open entrenched financial-information monopolies or at least forcing more competition where one provider has had too much power for too long. Consumer credit scores and corporate credit ratings are not the same market, so I don’t want to stretch the comparison too far. But the theme seems relevant: if regulators, issuers, and investors want more competition in important financial gatekeeping businesses, Morningstar DBRS could benefit from being a credible alternative to the legacy Big Three. Outside of DBRS, Morningstar has several other verticals that I think are better than the market gives them credit for: PitchBook — private market data, venture/private equity workflows, company data Morningstar Direct / Data — institutional investment data and analytics Sustainalytics — ESG / governance / risk research, even if ESG sentiment is out of favor right now Indexes / CRSP — potential to become more relevant in benchmarking and passive/index infrastructure Wealth / Retirement — not my favorite pieces, but still tied to advisor and retirement workflows So the way I’m thinking about it is: this is not just a “fund star rating” company anymoree. It’s more like a collection of financial data and trust-based infrastructure assets, some mature and some still under-monetized. The valuation is what makes it more interesting now. MORN historically traded at a premium multiple, but the stock looks much more reasonable today versus its own history. It’s not optically dirt cheap, but for a founder-influenced, high-margin, recurring-revenue-ish financial information business with a credible ratings arm, the multiple seems depressed. Main risks/counterpoints I see: DBRS is still much smaller than Moody’s, S&P, and Fitch. PitchBook growth has slowed versus the old hype period. ESG/Sustainalytics may be less exciting than people thought a few years ago. Morningstar may always carry a “retail brand” perception that keeps it from being valued like MSCI/SPGI/MCO. The regulatory angle could be wishful thinking — corporate credit ratings are not the same as consumer credit scoring. Capital allocation matters. They need to prove the newer verticals can compound, not just collect assets. But I do wonder if the market is missing the bigger picture: Morningstar may be evolving from a respected retail/investor research brand into a more serious institutional financial infrastructure company. DBRS gives them a seat at the credit ratings table, PitchBook gives them private market exposure, and the valuation seems depressed versus what the company could become. Does anyone else see this? Is MORN a misunderstood compounder at a depressed multiple, or am I giving them too much credit because the DBRS / PitchBook / indexing story sounds better on paper than it really is?