Morningstar, Inc.
MORN · Financial Services · Annual report 2025-12-31 · 5 reported years · Figures in USD
Market Cap
8.13B USD
Reference value set by the analyst
Average of the Three Values
2.66B USD
The plain average of EPV, Profit and FCFF
Intrinsic / Market Ratio
0.33×
Average / Market Cap, the ratio the list ranks by
Margin of Safety (Average)
-205.3%
1 − Market Cap / Average of the Three Values
Price / Book
6.65×
Market Cap / Book Value as printed (1.22B)
Greenwald Value, Case C: Earnings Power
2.85B USD
Protected franchise · -185.3%
Evidence: N is a note in the company's reports, F a line of its financial statements, R a fact from recent research; +n is n more sources. This page reads the company's own reports at its price date; the screener's values, the hollow dots, read the data provider's figures at their own date, so they differ on purpose.
Price vs Value
Every value of the company against the Market Cap on the price date above.
Bottom line
The intrinsic value of 2.66B USD is -205.3% away from the market cap of 8.12B USD. Morningstar is a franchise whose renewals, proprietary data histories and fixed-cost scale protect high returns. But the price already needs every projected year of Profit and FCFF, and several times more, before the average reaches it. Greenwald's value on the company's case, a reading beside the verdict, is the earnings power of 2.85B USD; it is closer to the price but still at a margin of -185.3%, and the market pays 2.85x the earnings power value.Book Value
Assets less liabilities, as printed
Asset Value
What an entrant would spend to reproduce the assets, less what is owed
EPV + Growth Value
From the report's figures
Profit
From the report's figures
1% capital at year 15 · 99% 15 years of profit
FCFF
From the report's figures
3% capital at year 15 · 97% 15 years of free cash flow, before the net cash or net debt
Average of the Three
Uncapped, as the screener averages them
Greenwald Value, Case C: Earnings Power
The value Greenwald assigns on this case
How Each Value Is Built
The screener's three formulas on the report's own figures. Each card reads the same way: the value as a sum of numbered terms, each term's calculation opened under it, from the reported figures to the value. The verdict rests on their plain average, as the screener ranks; the Greenwald value on the company's case is a reading beside it.
What it is worth
EPV + Growth
2.85B USD
what the normal year's earnings are worth for ever, plus growth that pays
Profit
2.70B USD
15 years of cash the shareholders can take out, and the equity left at year 15
FCFF
2.44B USD
15 years of cash for shareholders and lenders, less what is owed
Average Intrinsic Value
2.66B USD
The plain average of EPV, Profit and FCFF
Against the price
Market Cap
8.13B USD
the price on the date above times the shares
Intrinsic Value ÷ Market Cap
0.33×
the ratio the screener ranks by
Margin of Safety
-205.3%
1 − Market Cap / Average Intrinsic Value
EPV of the Operations (NOPAT over WACC)
3.31B USD
Net Debt and Claims Ahead of the Shareholders
-456.01M USD
Growth Value
0 USD
Value
2.85B USD
①EPV of the Equity
2.85B USD②Growth Value
0 USDMarket value
The price on the date above times the shares.
Value vs market
1 minus the market cap as a share of the value.
①Present Value of the 15 Years of FCFE
2.68B USD②Equity at Year 15, Today
21.73M USDMarket value
The price on the date above times the shares.
Value vs market
1 minus the market cap as a share of the value.
①Present Value of the 15 Years of FCFF
2.80B USD②Invested Capital at Year 15, Today
93.95M USD③Net Debt and Claims Ahead of the Shareholders
-456.01M USDMarket value
The price on the date above times the shares.
Value vs market
1 minus the market cap as a share of the value.
2.54B USD
Average on the reported years
EPV + Growth Value, Profit and FCFF on the years as reported
+57.81M USD
Acquisitions read as reinvestment
FCFF +173.44M USD
+65.31M USD
Growth by five-year blocks
Profit +99.06M USD, FCFF +96.86M USD
2.66B USD
Intrinsic value
the average the verdict rests on
- Acquisitions: counted as reinvestment, since buying a business is capital spending like building one: 59.26M USD in 2021, 663.56M USD in 2022, 46.35M USD in 2023, 39.04M USD in 2025, from Acquisitions, net of cash acquired and Payment of acquisition-related earn-outs.
Profit growth: the paid growth of the reported years.
FCFF growth: the paid growth of the reported years.
Profit growth by five-year blocks: years 1 to 5 -3.0%, years 6 to 10 from -1.4% to 5.0%, years 11 to 15 5.0%, the risk-free rate of the report’s currency, the long-run ceiling of an economy’s growth. The return on new capital falls by year 10 to 23.6%, the average return on capital of the Financial Data & Stock Exchanges industry in US, 12 companies, 1999 to 2025.
Measured on US's domestic companies, this company out. Largest: S&P Global Inc, 27.6% of the revenue.
FCFF growth by five-year blocks: years 1 to 5 -5.3%, years 6 to 10 from -3.3% to 5.0%, years 11 to 15 5.0%, the risk-free rate of the report’s currency, the long-run ceiling of an economy’s growth. The return on new capital falls by year 10 to 22.3%, the average return on capital of the Financial Data & Stock Exchanges industry in US, 12 companies, 1999 to 2025.
Measured on US's domestic companies, this company out. Largest: S&P Global Inc, 27.6% of the revenue.
Earnings Power vs Assets
Does the business earn more than it would cost to rebuild? Greenwald's test for a moat.
Asset Value
What a newcomer would spend to rebuild it, less what it owes; the bar runs from every asset at the cautious end of its inputs to every asset at the generous end (see Adjusted Balance Sheet)
-444.48M – -188.81M
Earnings Power Value
What the business earns, as if it never grew
2.85B USD
Market Cap
What the market pays for all the shares
8.13B USD
Logarithmic axis: 0.80× and 1.25× are the same distance from 1×.
Case A: The Assets Earn Too Little
The business earns less than it would cost to rebuild. A newcomer would not build it, so the value is what it earns, not what its assets cost.
Case B: A Normal Business
It earns about what its assets cost to rebuild: no moat and no penalty. The value is the asset value.
Case C: Something Protects It (This Company)
It earns well above what its assets cost. Something keeps newcomers out, and that franchise is worth the difference.
Franchise value
Earnings power value less asset value: what a moat is worth, negative when there is none.
3.20B USD
Bear case
The bear case rests on the asset value of -347.05M USD (from -444.03M USD to -188.63M USD).
Base case
The base case rests on Greenwald's value on the case, 2.85B USD: the earnings power of 287.36M USD after tax, capitalised at the cost of capital of 8.7%, less debt.
Bull case
The bull case rests on the intrinsic value of 2.66B USD: the average of EPV + growth (2.85B USD), Profit (2.70B USD) and FCFF (2.44B USD).
Expected Return
What a buyer at this price earns a year if the business holds: cash returned, organic growth and reinvestment, against the cost of equity.
4.7%
Cash Returned
Earnings Power less the cost of today's debt after tax (its rate × the debt), 262.12M USD, × 147.1% paid out, over the market cap
3.1%
Organic Growth
Revenue growth of 9.5% a year, the average of the reported years (Returns, Payouts and Debt), × value over price of 0.33
-18.6%
Reinvestment
-120.21M USD kept beyond what organic growth needs × 12.60 of value created per unit, over the market cap
-10.8%
Expected Return a Year
At value equal to price: -4.4%
Against a cost of equity of 9.5%: below it by 20.3%. At this price the business does not earn its cost of equity.
Paid out: the reported years' dividends and the buybacks beyond the shares issued, over net income, averaged. Value created per unit: the return on capital over the cost of equity. Working capital per unit of revenue: -1.4%.
What Comes Next
Dated events ahead that can matter to a holder, each with the quote that dates it.
- 2026EU rules for ESG ratings providers take effect for Morningstar SustainalyticsRegulation
Downside for holders
The rules will require significant investment in governance, internal controls, and compliance processes at a business whose revenue is already declining.
- 2026Remaining regular quarterly dividend of 50.0 cents per share expected in 2026Dividends and buybacks
Upside for holders
The company expects regular quarterly dividend payments of 50.0 cents per share in 2026, subject to board approval, returning cash to holders.
Earnings Power, Step by Step
Average margin on sustainable revenue, average tax, depreciation above maintenance CapEx.
From Revenue to the Value of the Operations
2.45B USD
Latest Revenue
15.6%
Average Operating Margin, Latest 5 Reported Years
383.10M USD
Sustainable Operating Profit
26.4%
Average Tax Rate
5.65M USD
Depreciation Above Maintenance CapEx, After Tax
287.64M USD
Earnings Power (NOPAT)
8.7%
Cost of Capital (WACC)
3.31B USD
EPV of the Operations
Cost of equity: 4.9799999999999995% the 10-year government bond in USD + beta 1.02 (the market's) × 4.46% the country's equity risk premium = 9.54%, in the currency of the figures it discounts.
Cost of debt after tax: interest of 28.63M USD over the year's average debt of 886.49M USD, less tax at 26.4% = 2.38%. Weighted 88.33% equity at the market cap, 11.67% debt: 8.70%.
The screener's rate, a check: 8.61%.
From the Operations to the Shareholders
EPV of the Operations
3.31B USD
Free Cash
cash the company may use freely
+474.97M USD
Assets the Business Does Not Need
Stake in Wealth Advisors (SBI Global Asset Management), Seed portfolios replicating Morningstar models, Investments in unconsolidated entities, Deferred tax assets
+155.81M USD
Debt
financial debt and leases
-1.07B USD
Claims Ahead of the Shareholders
minority interests, a dividend already declared
0 USD
Legacy Liabilities
pensions, lawsuits, environment: inherited from the past
-13.11M USD
EPV of the Equity
2.85B USD
No cell reaches the price between 6.7% and 10.7% cost of capital.
EPV of the equity in USD; the outlined cell is the analysis's own. Green above the market cap (8.13B), red below.
Returns, Payouts and Debt
What each reported year earned, paid to shareholders and owed, as the report prints it, before any adjustment.
Return on Capital, 2025
22.0%
operating profit after tax over book plus net debt
Dividend Yield
0.9%
the latest year's dividends over the Market Cap on the price date above
Paid Out in All, 2025
230.9%
dividends and the buybacks beyond the shares issued, over profit
Net Debt over EBITDA, 2025
0.8×
years of operating profit before depreciation to repay it
Dividend policy: The company raised its quarterly cash dividend from 45.5 cents to 50.0 cents per share in the fourth quarter of 2025 and expects to make regular quarterly dividend payments of 50.0 cents per share in 2026, with subsequent dividends subject to board approval.
2028
373.87M USD
2025 A-2 Facility (three-year term facility)
2030
350.35M USD
2025 Revolving Credit Facility
2030
350.35M USD
2.32% senior notes due October 26, 2030 (2030 Notes)
Lenders' conditions
- The 2025 Credit Agreement and the 2030 Notes require the company to maintain specified ratios of consolidated EBITDA to consolidated interest charges and of funded indebtedness (net funded indebtedness under the Credit Agreement) to consolidated EBITDA, evaluated on a quarterly basis.
- The company was in compliance with these financial covenants as of December 31, 2025, with consolidated funded indebtedness to consolidated EBITDA calculated at approximately 1.3x.
Financial Statements
Every line the reports print, before any adjustment, then what is calculated from them. Open a period for the document it comes from.
Who Owns It
Every holder of 5% or more of the capital the reports and the research name (5% is the share at which holders must disclose), then the rest of the capital.
Joe Mansueto
Family or founder, as of 31 Dec 2025
37.5%
The rest of the capital
holders the reports and the research do not name
62.5%
Peers
The company against listings in the same industry: how the market prices them, what they earn.
| Peer | Market | Market Cap (USD) | Price / Book | ROE | Op. Margin |
|---|---|---|---|---|---|
FDS FactSet Research Systems Inc. | US | 11.80B | 5.80× | 25.5% | 22.2% |
TRU TransUnion | US | 11.93B | 2.38× | 15.6% | 19.7% |
MSCI MSCI Inc. | US | 39.69B | — | — | 56.3% |
COIN Coinbase Global, Inc. | US | 49.99B | 3.82× | -7.8% | -13.9% |
NDAQ Nasdaq, Inc. | US | 51.29B | 4.27× | 16.5% | 49.3% |
MCO Moody's Corporation | US | 77.55B | 24.47× | 76.9% | 49.5% |
ICE Intercontinental Exchange, Inc. | US | 85.12B | 2.87× | 14.1% | 52.6% |
CME CME Group Inc. | US | 95.42B | 3.59× | 15.8% | 65.0% |
SPGI S&P Global Inc. | US | 114.54B | 3.12× | 14.3% | 44.8% |
ASX.AX ASX Limited | AU | 8.15B | 2.97× | 12.3% | 47.3% |
X.TO TMX Group Limited | CA | 10.43B | 2.88× | 13.2% | 51.3% |
8697.T Japan Exchange Group, Inc. | JP | 14.98B | 6.69× | — | 64.9% |
Financial Data & Stock Exchanges in the screener: 12 of 28, the same market first, then the closest in size. The company's own figures are from its report (2025): net income over the printed book value, operating profit over revenue.
In Our Strategy
Where the screener ranks the company and whether the strategy would buy it.
Not in what the strategy buys
Place 1,202 of 2,309 by value in its market (US). The strategy buys the first 25.
Place 1 is the cheapest: the highest value over market cap. Only companies above their market's floor count, $1B in every market and $500M in Romania, and a company listed in several markets counts once.
Adjusted Balance Sheet
From the book value the balance sheet prints to the asset value a buyer would count.
Book Value
assets less liabilities, as printed
1.22B USD
Accounts receivable, less allowance for credit losses of $7.1 million and $7.1 million, respectively
+7.11M USD
Income tax receivable
+79.48M USD
Deferred commissions
+409.81M USD
Prepaid expenses
-42.54M USD
Other current assets
-24.82M USD
Goodwill
-1.61B USD
Intangible assets, net
-379.68M USD
Property, equipment, and capitalized software, net
+62.36M USD
Deferred tax assets, net
-27.58M USD
Deferred commissions
-30.13M USD
Other assets
-12.11M USD
Asset Value
at reproduction, less what is owed
-347.40M USD
Investor Checklist
The questions to ask of any business, answered from the reports and research, or marked unknown.
Answered
22
questions
Not applicable
0
questions
Unknown
0
questions
business
The largest customers, products, suppliers and countries, and their share of revenue.
No customer is material: "our largest customer accounted for less than 3% of our consolidated revenue". Concentration is by product and by country.
- Revenue type: license-based revenue "represented 70.3% of our 2025 consolidated revenue". The rest is asset-based and transaction-based.
- Segments: the Morningstar Direct Platform is the largest, PitchBook the second, and Morningstar Credit the fastest growing.
- Credit grew strongly in 2025 on healthy issuance markets.
- Countries: the United States is the large majority of revenue, and international revenue is concentrated in Continental Europe and the UK.
- Suppliers: many data vendors are also competitors and could terminate access or change terms.
- Exception: in 2023 Institutional Asset Management lost significant assets when a large institutional client withdrew.
Fixed against variable costs, operating leverage, the main cost lines and what drives them.
Costs are mostly fixed. The company has "relatively high fixed costs, mainly for compensation and benefits, and low variable costs, making our operating results sensitive to revenue fluctuations", which gives high operating leverage.
- Cost of revenue: 952,900,000 in 2025, mainly data and research staff, a large share of them in India.
- Sales and marketing: 467,000,000 in 2025.
- General and administrative: 334,000,000 in 2025.
- Depreciation and amortization: 189,900,000 in 2025, including capitalised software and acquired intangibles.
- Stock-based compensation: 56,400,000 in 2025, a recurring real cost.
- Ratings: the credit ratings business has fixed monitoring costs that limit cuts in downturns.
How revenue, volumes and margins moved through past cycles and shocks.
Subscription revenue kept growing through the recent cycle, while the cyclical streams and the fixed cost base moved operating income much more.
- Revenue grew every year: 2,038,600,000 in 2023, 2,275,100,000 in 2024 and 2,445,500,000 in 2025.
- Operating income rose from 230,600,000 in 2023 to 526,600,000 in 2025. The 2024 and 2025 figures include one-off gains on customer asset sales.
- Credit ratings follow issuance. For 2023, "transaction-based fees comprised 50% of Morningstar DBRS's revenue".
- Weak US CMBS and RMBS issuance cut credit revenue and segment income in 2023.
- Healthy issuance lifted it in 2025.
- Asset-based fees move with market levels and have fallen in past market declines.
- PitchBook: "Our PitchBook business is also subject to cyclical trends specific to the private capital markets."
industry
What could replace the product or shrink the industry: substitutes, technology, energy transition, regulation.
The main threat named is AI, which the market reads as a substitute for data and software. AI is also becoming a channel for the data.
- AI: "recent market sentiment regarding the impact of AI on software and data company growth prospects has driven meaningful sector-wide stock price declines, including Morningstar's, despite strong operating performance."
- AI as a channel: in September 2026 OpenAI launched ChatGPT for Financial Services with indexed private market data from PitchBook, and the shares rose.
- Licence consolidation: "The decline in the Morningstar Direct renewal rate was primarily driven by license consolidation with existing clients."
- ESG: Sustainalytics revenue is declining, and new EU rules for ESG rating providers may require changes to its business model.
- Index regulation: the SEC may regulate index providers as investment advisers.
moat
Return on equity and on capital over the years in the statements, against the cost of capital.
Returns run well above the cost of capital. The projections earn 21.3% on equity and 23.3% on capital, against a cost of equity of 9.5% and a cost of capital of 8.7%. Equity has been cut by buybacks while goodwill carries much of the asset base.
- 2023: net income 141,100,000 on total equity of 1,327,800,000, depressed by one-off charges.
- 2024: net income 369,900,000 on total equity of 1,618,600,000, lifted by gains on sales of a business and of customer assets.
- 2025: net income 374,200,000 on total equity of 1,221,900,000, after treasury stock rose to -1,785,700,000.
- Goodwill of 1,610,800,000 at the 2025 year end means returns on the capital paid for acquisitions are lower than returns on the operating assets.
When the protections expire or could erode: licence or concession end dates, patent expiries, regulatory reviews, contract renewals.
No licence, concession or patent ending on a known date protects the business, so no protection has an end date. The protection is renewed client by client on subscriptions recognised "over the noncancellable term of each subscription agreement", and it erodes as renewal rates fall.
- Renewals: Morningstar Data "101% in 2025", Morningstar Direct "approximately 104% in 2025", PitchBook "approximately 103%, compared with 108% in 2024".
- Regulatory reviews: the NRSRO is examined annually by the SEC.
- The EU ESG rating provider regime starts in 2026.
- Sustainalytics applied to ESMA for authorisation in September 2026, with no decision published.
- Fund agreement: the management agreement for the company's own mutual fund trust is reviewed yearly by independent trustees.
- Patents: the reports mention patents but give no expiry dates.
earnings
One-off items, accruals against cash, capitalised costs, stock-based pay, provisions built or released.
Cash earnings exceed reported profit: operating cash flow was 589,700,000 against net income of 374,200,000 in 2025, helped by prepaid subscriptions. Reported income carries one-off gains and capitalised software, and stock-based pay is a real cost.
- One-off gains: gain on sale of customer assets of 64,000,000 in 2024 and 22,700,000 in 2025, and a gain on sale of business of 45,300,000 in 2024.
- One-off charges: severance from reorganisations and a product sunset, and in 2023 the China transition and an equity method expense of -11,800,000.
- Capitalised software is the main reinvestment and lowers reported operating expense.
- Stock-based compensation: 56,400,000 in 2025.
- Accruals: deferred revenue added 25,700,000 to 2025 operating cash, and deferred income taxes were -42,200,000.
- Taxes: cash paid for income taxes of 171,800,000 exceeded the tax expense of 121,500,000.
- Provisions: the provision for credit losses was 5,100,000 in 2025, with the allowance unchanged over the year.
Capital spending needed just to keep capacity, against growth spending and against depreciation.
Capital spending stays below depreciation and amortization: capex was -147,100,000 in 2025 against 189,900,000. That charge includes amortisation of acquired intangibles, so the reports do not split maintenance from growth spending.
- Capex is mainly capitalised software, IT equipment and leasehold improvements, amortised over short lives, so the base must be continually rebuilt.
- Capex rose from -119,100,000 in 2023 to -142,700,000 in 2024 and -147,100,000 in 2025.
- A multi-year move of data centers to the public cloud temporarily raises capex and operating costs.
- Depreciation of fixed assets and software is the reports' proxy for maintenance reinvestment.
balance sheet
Guarantees, purchase commitments, leases, pensions, litigation, environmental and decommissioning duties, obligations at the end of a concession.
Leases are on the balance sheet and no pension, environmental or concession obligation is disclosed. The remaining items are tax, litigation and data-use claims, some without an amount.
- Leases: operating lease liabilities of 41,800,000 current and 146,700,000 non-current, with no residual value guarantees.
- Tax: "a liability of $13.1 million for unrecognized tax benefits".
- No deferred tax is recognised on undistributed foreign earnings, and that liability is not quantified.
- Litigation: "one current case" in class action litigation over fiduciary and managed account activities, with no amount.
- Vendor audits may find "we may be required to make a payment for prior data usage"; the company cannot estimate the loss.
- Indemnities: obligations to clients and distributors on intellectual property claims.
- Regulatory capital requirements tie up cash in the broker-dealer and Australian subsidiaries.
- Commitments: a large bonus payout falls due in the first quarter, and a public emissions reduction target may carry costs.
Debt, maturities, covenants, refinancing needs, liquidity.
Long-term debt was 1,072,600,000 at the 2025 year end against cash of 474,500,000, a net debt of 0.83x EBITDA. Covenants were met and nothing falls due within a year, but debt rose after year end to buy CRSP.
- Maturities: principal falls due in 2028 and 2030.
- Debt structure: a 2025 credit agreement with a revolver and term facilities at floating SOFR-based rates, plus fixed-rate private placement notes due 2030.
- Covenants: leverage and interest cover covenants are tested quarterly and were met.
- Use of debt: debt rose sharply in 2025, largely to fund share buybacks.
- After year end: the CRSP acquisition was funded by drawing the delayed draw term facility.
- Liquidity: undrawn capacity remains and customer prepayments fund operations, but most cash sits outside the US.
Assets the business does not need to run: surplus cash, investments, idle land or plant.
A few non-operating holdings stand beside the business, and deferred revenue lets cash stand beside operations. Most of the cash and investments sit outside the US.
- Investments: 54,200,000, mostly seed money replicating the company's model portfolios (not free surplus cash), and the listed stake in Wealth Advisors.
- Investments in unconsolidated entities: 50,300,000, including SmartX carried at a cost-based amount.
- Deferred tax assets: 78,700,000 at book.
- Cash: 474,500,000. Repatriating it may carry tax cost.
management
Dividends, buybacks, investments and acquisitions over time, and what they returned.
Capital went to steady dividends, many acquisitions over two decades and, in 2025, a buyback far larger than before, part of it funded by borrowing. The reports do not measure what the acquisitions returned, beyond no goodwill impairment in three years.
- Buybacks: -1,400,000 in 2023, -11,600,000 in 2024 and -787,000,000 in 2025. A new programme runs to 2028, and the company buys when it judges the price attractive against its own estimate of intrinsic value.
- Dividends: -63,900,000, -69,300,000 and -76,900,000 paid over 2023 to 2025, raised each year.
- Acquisitions: a long record of acquisitions to support growth.
- 2025: -39,000,000 for DealX and Lumonic.
- 2026: CRSP.
- Divestitures: the Commodity and Energy Data business and the US TAMP customer assets, with proceeds of 52,400,000 and 65,000,000 in 2024.
Minority protection, related-party dealings, the board and its independence (the main shareholders have their own section).
The founder chairs the board as executive chairman and holds enough to sway any vote, including a change of control. The reports do not describe board independence.
- Control: the founder's stake gives him substantial influence over director elections and any merger or sale, which may deter acquirers.
- Conflicts: the CEO sits on the board of a private wealth management firm, and the executive chairman has large outside business interests.
- Internal control: a material weakness in segment reporting drew an adverse auditor opinion for 2023; control was judged effective at the 2025 year end.
- Disclosure: no earnings guidance and no one-on-one investor meetings.
- Contracts: an executive severance policy was adopted in 2025.
Who runs it, their record, their incentives, turnover.
The founder remains executive chairman, and the CEO previously sat on PitchBook's board before its acquisition. The record shows revenue growing every year, from 2,275,100,000 in 2024 to 2,445,500,000 in 2025, with some turnover at the top.
- Turnover: a new CFO took office in 2025, promoted from chief strategy officer, and the chief revenue officer left during the year.
- Key-person risk: no executive officer has an employment or noncompete agreement.
- Incentives: the PitchBook management bonus plan was terminated and its awards forfeited, and the incentive plan was amended and restated from the start of 2026.
- Cost record: workforce reductions and the Shenzhen downsizing.
regulation
Who regulates, how prices or tariffs are set, the allowed return, the next review.
No regulator sets prices or an allowed return: the businesses are registered and supervised, and prices are set with clients. The next review in view is ESMA's authorisation of Sustainalytics under the EU ESG rating provider regime.
- Credit ratings: "DBRS, Inc., is registered with the US Securities and Exchange Commission (SEC) as a Nationally Recognized Statistical Rating Organization (NRSRO)", and the ratings business is regulated "in Canada, the US, the UK, Australia, and the EU".
- Annual SEC examinations.
- Past SEC settlements with civil penalties.
- Investment management: SEC-registered advisers with fiduciary duties, and a FINRA broker-dealer.
- Indexes: UK benchmark authorisation ended and administration moved to the German entity; EU amendments take most benchmarks out of scope.
- ESG: Sustainalytics applied to ESMA in September 2026, and no decision had been published.
Special taxes, state intervention, currency, country risk.
The business is US-based, but it works and sells across many countries without hedging its currency exposure.
- Currency: foreign exposure is unhedged; exchange rates added 36,100,000 to cash in 2025.
- Sanctions: sanctions and embargoes have restricted sales in some geographies and caused lost revenue.
- War: PitchBook development depends on a Ukrainian contractor.
- Compliance: offices in FATF grey-list jurisdictions such as South Africa face enhanced standards.
- Tax: the EU Pillar Two minimum tax could raise the effective rate.
- Political scrutiny: inquiries over ESG data and ratings consume resources.
technology
The systems the business runs on (control, IT, automation): their state, cyber risk, obsolescence.
The business runs on its own software and databases, increasingly hosted by third-party clouds. The company reports no cybersecurity event with a material impact to date.
- Cloud: most data storage and several products have moved to third-party cloud, and provider outages have affected the company.
- Backup facilities are provided mainly by a third party.
- Key sites: the Chicago headquarters and the Mumbai data, technology and operations center.
- Index calculation: "Morningstar Indexes completed a multi-year global project to bring index calculations in-house".
- Retirement advice runs on a proprietary automated engine, where errors could create fiduciary liability.
For a technology-driven business: switching costs, network effects, proprietary data, R&D as investment, marginal cost of scale, retention.
The moat is proprietary data and the workflows built on it. Clients renew above full retention and the fixed cost of the data is spread over the largest client base, but retention and user growth are softening.
- Proprietary data: the Medalist Rating "covers more than 179,000 mutual funds, exchange-traded funds (ETFs), separately managed accounts, and model portfolios".
- PitchBook covers "3.8 million privately-held companies".
- Retention: renewal rates of "101%", "approximately 104%" and "approximately 103%", the last down from "108% in 2024".
- R&D as investment: internal software development is capitalised each year as the main reinvestment.
- Scale: fixed costs with "low variable costs".
- User growth: key user counts in Direct and PitchBook were flat, so growth came from pricing and expansion.
- AI: AI platforms now license PitchBook data.
Age and condition of the physical assets, remaining life, deferred maintenance.
The business is asset-light: net long-lived assets are small against revenue and mostly capitalised software. No deferred maintenance is disclosed.
- Software and equipment: accumulated depreciation is high against gross cost, on short lives, so the base needs continuous reinvestment.
- Property, equipment and capitalised software: 231,900,000 net at the 2025 year end.
- Offices: leased, with terms of up to ten years; no major real estate is owned.
market
What the price implies, liquidity, analyst coverage, why the market pays what it pays.
The market pays 2.85x the earnings power value, a margin of safety of -205.3%. The price needs Profit and FCFF several times what the reported years support, so it assumes growth that today's reinvestment does not pay for, with an expected return of -10.8%.
- Price trend: the shares fell on AI sentiment "despite strong operating performance" and were down 5.1% for the year by mid-September 2026.
- Liquidity: trading volume is low.
- Coverage: there is no guidance and no one-on-one meetings, which limits analyst coverage. The reports do not count the analysts.
- Why the market pays this: steady organic revenue growth and a dividend yield of 0.9%.
Why the gap might never close.
Here the price stands above the value, and the gap may persist if the market keeps valuing the franchise on revenue growth while the cash keeps leaving.
- Payouts: buybacks and dividends exceed earnings, so the reported years pay for shrinking.
- Buybacks above value: buybacks funded with debt at prices above the value would lower the value per share, not close the gap.
- Founder control: it deters acquirers, so no takeover price anchors the shares.
decision
The facts that, if observed, would prove the conclusion wrong.
The conclusion that the price exceeds the value would be proved wrong by observing any of the following.
- Renewal rates for Direct and PitchBook re-accelerate and user counts grow again.
- Retained cash goes into acquisitions such as CRSP, or internal reinvestment, at returns near today's, so the printed growth turns positive.
- AI licensing of PitchBook data becomes a reported source of new revenue.
- Sustainalytics gains ESMA authorisation and stops declining.
- Ratings and asset-based revenue hold through a weaker issuance or market cycle.
| Question | Answer | Evidence | |
|---|---|---|---|
| business | |||
| The largest customers, products, suppliers and countries, and their share of revenue. | No customer is material: "our largest customer accounted for less than 3% of our consolidated revenue". Concentration is by product and by country.
| ||
| Fixed against variable costs, operating leverage, the main cost lines and what drives them. | Costs are mostly fixed. The company has "relatively high fixed costs, mainly for compensation and benefits, and low variable costs, making our operating results sensitive to revenue fluctuations", which gives high operating leverage.
| ||
| How revenue, volumes and margins moved through past cycles and shocks. | Subscription revenue kept growing through the recent cycle, while the cyclical streams and the fixed cost base moved operating income much more.
| ||
| industry | |||
| What could replace the product or shrink the industry: substitutes, technology, energy transition, regulation. | The main threat named is AI, which the market reads as a substitute for data and software. AI is also becoming a channel for the data.
| ||
| moat | |||
| Return on equity and on capital over the years in the statements, against the cost of capital. | Returns run well above the cost of capital. The projections earn 21.3% on equity and 23.3% on capital, against a cost of equity of 9.5% and a cost of capital of 8.7%. Equity has been cut by buybacks while goodwill carries much of the asset base.
| ||
| When the protections expire or could erode: licence or concession end dates, patent expiries, regulatory reviews, contract renewals. | No licence, concession or patent ending on a known date protects the business, so no protection has an end date. The protection is renewed client by client on subscriptions recognised "over the noncancellable term of each subscription agreement", and it erodes as renewal rates fall.
| ||
| earnings | |||
| One-off items, accruals against cash, capitalised costs, stock-based pay, provisions built or released. | Cash earnings exceed reported profit: operating cash flow was 589,700,000 against net income of 374,200,000 in 2025, helped by prepaid subscriptions. Reported income carries one-off gains and capitalised software, and stock-based pay is a real cost.
| ||
| Capital spending needed just to keep capacity, against growth spending and against depreciation. | Capital spending stays below depreciation and amortization: capex was -147,100,000 in 2025 against 189,900,000. That charge includes amortisation of acquired intangibles, so the reports do not split maintenance from growth spending.
| ||
| balance sheet | |||
| Guarantees, purchase commitments, leases, pensions, litigation, environmental and decommissioning duties, obligations at the end of a concession. | Leases are on the balance sheet and no pension, environmental or concession obligation is disclosed. The remaining items are tax, litigation and data-use claims, some without an amount.
| ||
| Debt, maturities, covenants, refinancing needs, liquidity. | Long-term debt was 1,072,600,000 at the 2025 year end against cash of 474,500,000, a net debt of 0.83x EBITDA. Covenants were met and nothing falls due within a year, but debt rose after year end to buy CRSP.
| ||
| Assets the business does not need to run: surplus cash, investments, idle land or plant. | A few non-operating holdings stand beside the business, and deferred revenue lets cash stand beside operations. Most of the cash and investments sit outside the US.
| ||
| management | |||
| Dividends, buybacks, investments and acquisitions over time, and what they returned. | Capital went to steady dividends, many acquisitions over two decades and, in 2025, a buyback far larger than before, part of it funded by borrowing. The reports do not measure what the acquisitions returned, beyond no goodwill impairment in three years.
| ||
| Minority protection, related-party dealings, the board and its independence (the main shareholders have their own section). | The founder chairs the board as executive chairman and holds enough to sway any vote, including a change of control. The reports do not describe board independence.
| ||
| Who runs it, their record, their incentives, turnover. | The founder remains executive chairman, and the CEO previously sat on PitchBook's board before its acquisition. The record shows revenue growing every year, from 2,275,100,000 in 2024 to 2,445,500,000 in 2025, with some turnover at the top.
| ||
| regulation | |||
| Who regulates, how prices or tariffs are set, the allowed return, the next review. | No regulator sets prices or an allowed return: the businesses are registered and supervised, and prices are set with clients. The next review in view is ESMA's authorisation of Sustainalytics under the EU ESG rating provider regime.
| ||
| Special taxes, state intervention, currency, country risk. | The business is US-based, but it works and sells across many countries without hedging its currency exposure.
| ||
| technology | |||
| The systems the business runs on (control, IT, automation): their state, cyber risk, obsolescence. | The business runs on its own software and databases, increasingly hosted by third-party clouds. The company reports no cybersecurity event with a material impact to date.
| ||
| For a technology-driven business: switching costs, network effects, proprietary data, R&D as investment, marginal cost of scale, retention. | The moat is proprietary data and the workflows built on it. Clients renew above full retention and the fixed cost of the data is spread over the largest client base, but retention and user growth are softening.
| ||
| Age and condition of the physical assets, remaining life, deferred maintenance. | The business is asset-light: net long-lived assets are small against revenue and mostly capitalised software. No deferred maintenance is disclosed.
| ||
| market | |||
| What the price implies, liquidity, analyst coverage, why the market pays what it pays. | The market pays 2.85x the earnings power value, a margin of safety of -205.3%. The price needs Profit and FCFF several times what the reported years support, so it assumes growth that today's reinvestment does not pay for, with an expected return of -10.8%.
| ||
| Why the gap might never close. | Here the price stands above the value, and the gap may persist if the market keeps valuing the franchise on revenue growth while the cash keeps leaving.
| ||
| decision | |||
| The facts that, if observed, would prove the conclusion wrong. | The conclusion that the price exceeds the value would be proved wrong by observing any of the following.
| ||
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