Morningstar - Comparative Multiple Analysis

Morningstar (Comparative Multiple Analysis)


Notes on the Comparative Multiple Analysis of Morningstar

WikiWealth compares Morningstar's revenue, EBITDA, and EBIT multiples to their peers in order to determine the appropriate fair valuation. Click in the top right corner to experiment with Morningstar's comparative analysis.

Notes from the analysis:

1. WikiWealth uses quantitative measures to determine the multiple range for Morningstar.
2. Free cash flow to the firm (FCF) multiple is free cash flow to equity holders plus interest owed to Morningstar's debt holders.
3. Multiples incorporate benefits due to economies of scale; WikiWealth compares absolute enterprise value multiples to competitor's multiples.
4. WikiWealth excludes outliers when calculating individual company multiples.

Helpful Information for Morningstar's Analysis

How does this work? The Comparative Investment Analysis determines the value of Morningstar by comparing Morningstar financial ratios, prices, growth rates, margins, etc. to those of relevant peer groups.

Value Investing Importance? This method is widely used by investment professionals to determine the correct price of investments, especially initial public offerings (IPOs). It is one element of WikiWealth's three Wall Street approaches used to determine the correct fair value of Morningstar.

See the Morningstar cash flow (DCF) analysis for a completely different approach that's popular on Wall Street for determining the value of an investment in Morningstar.

Also, see the Morningstar's buffett intrinsic valuation analysis for WikiWealth's attempt to replicate the investing formula's used by Warren Buffett and Morningstar's valuation conclusion for a quick summary.