The less predictable (or uncertain), the higher the margin of safety is required for a 4-star or 5-star rating.įor example, Mcdonald’s future cashflow is more predictable and stable than Lions Gate Entertainment.įor Lions Gate Entertainment stock to be assigned a 4-star or 5-star rating, its current market price must be much much lower than its fair value estimate.Īll in all, I think Morningstar ratings and fair value estimate are useful, but I would only use it as one of my sources to find investment ideas. That’s why Morningstar takes into account of “the predictability of company’s future cash flow”. Morningstar calculates its fair value estimate based on its estimate of how much cash the company will generate in the future.Īs you all know, no one can predict the future with 100% accuracy. Is Morningstar Fair Value Estimate reliable? On the other hand, a 1-star or 2-star rating means that the stock is trading meaningfully above fair value.Ī 3-star rating means the stock is trading near fair value. The further the market price is below the fair value, the higher the star rating (with 5-star being the highest and 1-star being the lowest).Ī 5-star rating means that the stock is trading meaningfully below fair value, which means it’s a good price to buy. It’s calculated by comparing a stock’s current market price with Morningstar‘s estimate of the stock’s fair value. In other words, it tells you whether the stock is above its fair value, below its fair value, or near fair value. Morningstar’s Star Rating gives you an idea of the stock’s current valuation. This brings us to Morningstar’s stock Star Rating. So, how do you know which wide-moat stocks you should buy and when you should buy them? There are three type of economic moat rating:Ĭompanies with “Wide Moat” rating have the most sustainable competitive advantages.Īnd these companies are the best for long term investments.īelow is a screenshot that shows a small section of the entire “Wide-Moat Stocks” list. To help you gauge whether or not a company has “long-term advantages” over its competitors, Morningstar provides you with economic moat ratings for each stock. Morningstar adopts a stock-picking approach that focuses on long-term advantages and intrinsic value. So, how exactly does Morningstar rate stocks? On top of that, it also assign ratings on the stocks. Morningstar analysts provide opinion on the latest news affecting a stock that you are interested in.Īlso, they help you put into context recent news and events such as earnings releases, legislative changes, or global news events as well as talk about whether and how recent events impact the company’s fair value estimate or economic moat rating. Now, what is unique to Morningstar are its analyst research reports and its ratings. This is not unique because generally all the stock research and analysis platform provide you with almost the same data. The biggest selling point of Morningstar Premium would definitely be its ratings, stock research reports and stock valuations.įirst, let’s look at its individual stock analysis page.īelow is a screenshot of what you can expect after you enter a stock symbol.Īs you can see from above, Morningstar Premium gives you all the basic financial and fundamental information on the stock. Now, let’s first take an in-depth look at Morningstar Premium. Hopefully, you will find it useful and time-saving (possibly money-saving too). So, is Morningstar Premium worth the money?Ĭan it really help you make better investment decisions and achieve above average returns?Īlso, how does Morningstar Premium compare with other subscription-based stock investment services such as Yahoo Finance Premium and Motley Fool?Īfter trying out ALL the above, here’s a very detailed comparison including both the pros and cons of each stock investment service. DISCLOSURE: THIS POST MAY CONTAIN AFFILIATE LINKS,MEANING That I GET A COMMISSION IF YOU DECIDE TO MAKE A PURCHASE THROUGH MY LINKS, AT NO COST TO YOU.
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