MORN

Morningstar is a leading investment-data and analytics franchise (Morningstar Data, PitchBook, DBRS credit ratings, indexes and retirement solutions) with a sticky, largely subscription-based revenue model. FY2025 extended its steady compounding: revenue grew 7.5% to $2.45B and operating income rose 8.6% to $527M, lifting operating margin to 21.5%. The business generates strong cash — operating cash flow of $590M against $147M of capex — and earns an impressive 30.6% return on equity, reflecting the capital-light, high-recurring-revenue nature of data and analytics.

Management has turned firmly toward shareholder returns. Buybacks surged to $787M (shares outstanding down 7.6%) and the dividend grew 11.0% to $76.9M. That capital return was partly debt-funded — long-term debt rose 53.5% to $1.07B and equity fell 24.5% — so net income was only roughly flat (+1.2% to $374M) as interest costs rose, even though operating income grew nicely and diluted EPS rose 3.4% to $8.87 on the lower share count. The leverage (liabilities/equity 1.94x) is moderate and serviceable given the predictable cash flows.