Is Morningstar Worth Subscription?

[no_free_lunch]

I have been thinking about buying a morningstar subscription for the past several years and think maybe now is the time.  I am curious if anyone on the board subscribes to them and what they think of their research.  I would be using them exclusively for their individual equity research and rankings.

 

[Packer16]

I use them for their FV estimates as reasonableness check and they also have nice 10 year data on FCF and other parameters I finf useful.  I also us thier bond and option information.

 

Packer

[DCG]

I used to use them for a few years, but was kind of disappointed overall - at least with their fair value estimates. They fall into the trap most analysts fall into of constantly revising their target price higher as stocks go up, and revising them lower when stocks go down - and not based on long-term fundamentals.

[tooskinneejs]

As a long time Morningstar subscriber, I've been wondering the same thing recently.  Why?  Because during the market collapse in 2008/2009, Morningstar lost confidence in it's "consider buying at" and "consider selling at" prices (presumably because stock prices dropped significantly below any reasonable "consider buying at" levels) and, as a result, widened the range around their FV estimates so broadly as to become practically useless.

 

A current example is illustrative of this.  Apple has a FV estimate of $600, a consider buying price of $360, and a consider selling price of $900.  The spread between the buying and selling amounts is so wide that it basically screams "we're not very confident in our FV estimate."  Now I know just as well as anyone that intrinsic value isn't a precise number, but when they widen the range like this, it makes my question the value and reliability of their numbers.  Apple is supposedly worth only $600, but I shouldn't even consider selling it unless it goes over $900?  How should one make sense of this?

 

That said, Morningstar still does a great job at providing insights into the nature of company's businesses including their competitive positions.  They also focus on the fundamentals of the business (not just "we expect $0.xx cents of earnings next quarter, therefore our price target is $XX that is common in other analyst reports).

[Phaceliacapital]

I like how they don't focus on everything the sell side focuses on (ST, earnings and revenue beats etc etc) and how they dare to take a (controverse) point of view.

 

In recent months I talked to every auto sell side analyst that passed by here about Fiat and got little to no feedback (of course, it has little to no free cash flow, help!!!!), but just read the Fiat case from Morningstar and you quickly understand that they do think outside of the box. They also deliver very good industry reports :)

 

Shame that they lack strong EU coverage.

 

From a recent WSJ survey (for what it's worth):

 

Our top-ranked analysts are:

 

·        Karen Andersen, CFA, senior equity analyst, who ranked first in the "Biotechnology" industry, out of 78 analysts, and had the highest score overall;

·        Michael Corty, CFA, senior equity analyst, who ranked first in the "Advertising & Publishing" industry, out of 22 analysts, and second in the "Broadcasting & Entertainment" industry, out of 48 analysts;

·        Erin Davis, senior equity analyst, who ranked first in the "Banks" industry, out of 147 analysts;

·        Daniel Holland, equity analyst, who ranked third in the "Electronic & Electrical Equipment" industry, out of 47 analysts;

·        Brett Horn, associate director of equity analysis, who ranked first in the "Business & Industrial Services" industry, out of 75 analysts;

·        Jaime Katz, CFA, equity analyst, who ranked first in the "Leisure Goods & Services" industry, out of 39 analysts;

·        Erin Lash, CFA, senior equity analyst, who ranked second in the "Food & Tobacco" industry, out of 39 analysts;

·        Vincent Lui, CFA, equity analyst, who ranked first in the "Insurance: Life" industry, out of 20 analysts;

·        Ken Perkins, equity analyst, who ranked first in the "Beverages" industry, out of 18 analysts;

·        Jim Ryan, senior equity analyst, who ranked first in the "Insurance: Non-Life" industry, out of 37 analysts;

·        Greggory Warren, CFA, senior equity analyst, who ranked second in the "Investment Services" industry, out of 47 analysts; and

·        Drew Woodbury, CFA, equity analyst, who ranked second in the "Insurance: Non-Life" industry, out of 37 analysts.

 

We’re very proud of our analysts’ achievements, and this recognition from The Wall Street Journal affirms the high caliber of our research.

 

 

[Palantir]

It is useful for looking into MF's for asset allocation data, expense ratios, but that may be available free as well or on google. What's good with morningstar is their screener. If your company is heavy on using MF's, it might be worth it, and it is not too expensive.

 

 

For private use, I don't think it is as useful.

[jay21]

I like how they don't focus on everything the sell side focuses on (ST, earnings and revenue beats etc etc) and how they dare to take a (controverse) point of view.

 

In recent months I talked to every auto sell side analyst that passed by here about Fiat and got little to no feedback (of course, it has little to no free cash flow, help!!!!), but just read the Fiat case from Morningstar and you quickly understand that they do think outside of the box. They also deliver very good industry reports :)

 

Shame that they lack strong EU coverage.

 

From a recent WSJ survey (for what it's worth):

 

Our top-ranked analysts are:

 

·        Karen Andersen, CFA, senior equity analyst, who ranked first in the "Biotechnology" industry, out of 78 analysts, and had the highest score overall;

·        Michael Corty, CFA, senior equity analyst, who ranked first in the "Advertising & Publishing" industry, out of 22 analysts, and second in the "Broadcasting & Entertainment" industry, out of 48 analysts;

·        Erin Davis, senior equity analyst, who ranked first in the "Banks" industry, out of 147 analysts;

·        Daniel Holland, equity analyst, who ranked third in the "Electronic & Electrical Equipment" industry, out of 47 analysts;

·        Brett Horn, associate director of equity analysis, who ranked first in the "Business & Industrial Services" industry, out of 75 analysts;

·        Jaime Katz, CFA, equity analyst, who ranked first in the "Leisure Goods & Services" industry, out of 39 analysts;

·        Erin Lash, CFA, senior equity analyst, who ranked second in the "Food & Tobacco" industry, out of 39 analysts;

·        Vincent Lui, CFA, equity analyst, who ranked first in the "Insurance: Life" industry, out of 20 analysts;

·        Ken Perkins, equity analyst, who ranked first in the "Beverages" industry, out of 18 analysts;

·        Jim Ryan, senior equity analyst, who ranked first in the "Insurance: Non-Life" industry, out of 37 analysts;

·        Greggory Warren, CFA, senior equity analyst, who ranked second in the "Investment Services" industry, out of 47 analysts; and

·        Drew Woodbury, CFA, equity analyst, who ranked second in the "Insurance: Non-Life" industry, out of 37 analysts.

 

We’re very proud of our analysts’ achievements, and this recognition from The Wall Street Journal affirms the high caliber of our research.

 

I didn't see anything on Fiat, but I thought the pieces I read on GM were well done.

[DCG]

As a long time Morningstar subscriber, I've been wondering the same thing recently.  Why?  Because during the market collapse in 2008/2009, Morningstar lost confidence in it's "consider buying at" and "consider selling at" prices (presumably because stock prices dropped significantly below any reasonable "consider buying at" levels) and, as a result, widened the range around their FV estimates so broadly as to become practically useless.

 

A current example is illustrative of this.  Apple has a FV estimate of $600, a consider buying price of $360, and a consider selling price of $900.  The spread between the buying and selling amounts is so wide that it basically screams "we're not very confident in our FV estimate."  Now I know just as well as anyone that intrinsic value isn't a precise number, but when they widen the range like this, it makes my question the value and reliability of their numbers.  Apple is supposedly worth only $600, but I shouldn't even consider selling it unless it goes over $900?  How should one make sense of this?

 

That said, Morningstar still does a great job at providing insights into the nature of company's businesses including their competitive positions.  They also focus on the fundamentals of the business (not just "we expect $0.xx cents of earnings next quarter, therefore our price target is $XX that is common in other analyst reports).

 

Completely agree with all this.

[Guest deepValue]

Instead of having to debate Morningstar's value proposition, you could just get the whole package completely free through any major public library. It's a wonder why anyone pays for Morningstar.

[mcliu]

Does Morningstar have anything equivalent to an "initiating coverage" report with very comprehensive information about the businesses? Most of the Morningstar reports that I've seen seem to be summarized notes on the company without any detailed information.

[thecynic]

Instead of having to debate Morningstar's value proposition, you could just get the whole package completely free through any major public library. It's a wonder why anyone pays for Morningstar.

 

Most of the city library cards even allow access from home. The only drawback is you cannot create personalized portfolios and save them on the website.

[tengen]

I have free access to Morningstar research through my online brokerage (RBC Direct). Not something I use a lot but hey, it's free.

[cubsfan]

I've subscribed to Morningstar for 4 years and have been very happy with them.

For $250/yr or whatever it is - I think it's a very good source.

I do like the 10 year financial view. I think SOME of the analyst reports are insightful

with emphasis on indentifying moats as protectors of intrinsic value.

I also like free cash flow view.

 

So if you're a value investor from the Buffett/Graham school - I think the data is pretty good

and matches the way I think as an investor. If you're looking for these types of things, $250 may be

well worth the price.

[Gamecock-YT]

I'm much more partial to Value Line, having used both it and Morningstar, but it probably comes down to what you can find the cheapest. Like what was mentioned earlier, you'll be surprised to see what kind of databases your local library has for free. I'm still milking my former universities' Value Line even though I haven't been enrolled in over 2 years.  ;D

[Packer16]

Value Line is another resource that is worth the price in my opinion.  Between the two you can get a pretty good view of the cash flows and valuations of the major sectors of the US market.

 

Packer

[no_free_lunch]

Well thanks to all who replied!  The library idea was worth pursuing and while they don't have morningstar, I apparently do have access to valueline through the library.  I hadn't even thought of valueline but I think I would actually prefer it to morningstar.  Isn't that what Buffet used to use?  I was looking for somethingthat can reduce the initial period where i am building up my initial slice of knowledge in order to figure out if I want to proceed with the research.  Normally, it is a number of articles, links on google/yahoo finance, maybe a quick skim through the latest 10-Q, etc.  So much faster with valueline.

 

Thanks again, you guys are great. :)

[boilermaker75]

Instead of having to debate Morningstar's value proposition, you could just get the whole package completely free through any major public library. It's a wonder why anyone pays for Morningstar.

 

Thanks for this suggestion. I used to look at the 10 year financial data summary, which used to be available for free but now requires premium membership. In just a couple of minutes I was able to figure out how to access it again for free through my university library system.

[Rabbitisrich]

Valueline one-pagers are great, but they are cumbersome to download. Is there anyway to update one-pagers automatically, or to create a list and download them in groups?

[Ross812]

PM me if you need a link to the library edition of Morningstar premium.

[Guest longinvestor]

Morningstar's singular worst contribution to society has been their rating system of mutual funds, thanks to which the average joe has lost his shirt by serially selling and buying at exactly the wrong time. Ask around and you will see just how many people do this "rebalancing" year after year. Wish they would step up to educate the general public with active disclosure or whatever it takes to stop this malaise. Otherwise, they need to be held fully in collusion with the mutual fund industry for the en masse destruction of wealth of the overly trusting, misinformed and naïve general public. It is a shame!

[snowball82]

 

PM me if you need a link to the library edition of Morningstar premium.

 

i see you like pet and pharmacy, what do you think about Pethealth inc (PTZ-TO) ?

[Guest ajc]

 

Two interesting articles on $MORN

 

 

Morningstar: A Force To Be Reckoned With - http://www.ft.com/cms/s/0/e02d2768-22d2-11e4-8dae-00144feabdc0.html

 

The Quiet Billionaire: Morningstar CEO Joe Mansueto - http://www.chicagomag.com/Chicago-Magazine/June-2006/The-Quiet-Billionaire/

 

 

 

[tede02]

I am a subscriber.  We use the service primarily for mutual fund data.  I really like the service.  I totally agree that the ranking system should be ignored.  However, the tool is so handy for finding lots of information in one place as well as looking at comparative performance over custom time periods. 

 

I also used to look at my local library's Value Line subscription.  Also a great resource, particularly for individual equities.  I learned about it by reading Peter Lynch's "One Up On Wall Street."  I think Walter Schloss used to rely on Value Line pretty heavily. 

[DooDiligence]

Morningstar has been a decent place to start prospecting but is virtual garbage when it comes to ratings & valuations.

 

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Over the past year, I started noticing wide, short term, gyrations in the quantity of 5 star stocks reported from the "Stock Favorites" link:

 

Date - # of 5 star stocks on Morningstar

 

12 Nov - x43

13 Nov - x25

15 Nov - x709

19 Nov - x1066

 

The vast majority of 5 star rated businesses have no analyses at all.

 

A week from now they'll be back down to presenting 20 five star stocks with no apparent reason for the cull.

 

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ATM, Bagger Daves is listed as a 5 star stock, BAGGER DAVES, really?

 

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You get what you pay for and I'm paying nothing with library access so I should stop bitching, right?

[boilermaker75]

Instead of having to debate Morningstar's value proposition, you could just get the whole package completely free through any major public library. It's a wonder why anyone pays for Morningstar.

 

Yep, I access through my university's library.