Morningstar (NASDAQ: MORN) and Invesco (NYSE:IVZ) are both business services companies, but which is the better business? We will compare the two businesses based on the strength of their earnings, profitability, dividends, analyst recommendations, risk, valuation and institutional ownership.
Profitability
Get Morningstar alerts:This table compares Morningstar and Invesco’s net margins, return on equity and return on assets.
Net Margins | Return on Equity | Return on Assets | |
Morningstar | 16.15% | 17.53% | 10.28% |
Invesco | 21.64% | 12.70% | 3.61% |
Analyst Ratings
This is a breakdown of current ratings and recommmendations for Morningstar and Invesco, as reported by MarketBeat.
Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
Morningstar | 0 | 0 | 0 | 0 | N/A |
Invesco | 0 | 6 | 7 | 0 | 2.54 |
Invesco has a consensus target price of $36.92, indicating a potential upside of 43.00%. Given Invesco’s higher possible upside, analysts clearly believe Invesco is more favorable than Morningstar.
Dividends
Morningstar pays an annual dividend of $1.00 per share and has a dividend yield of 0.8%. Invesco pays an annual dividend of $1.20 per share and has a dividend yield of 4.6%. Invesco pays out 44.4% of its earnings in the form of a dividend. Morningstar has raised its dividend for 6 consecutive years and Invesco has raised its dividend for 9 consecutive years. Invesco is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Valuation & Earnings
This table compares Morningstar and Invesco’s top-line revenue, earnings per share (EPS) and valuation.
Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
Morningstar | $911.70 million | 6.13 | $136.90 million | N/A | N/A |
Invesco | $5.16 billion | 2.04 | $1.13 billion | $2.70 | 9.56 |
Invesco has higher revenue and earnings than Morningstar.
Risk and Volatility
Morningstar has a beta of 0.79, meaning that its stock price is 21% less volatile than the S&P 500. Comparatively, Invesco has a beta of 1.7, meaning that its stock price is 70% more volatile than the S&P 500.
Insider & Institutional Ownership
38.3% of Morningstar shares are owned by institutional investors. Comparatively, 80.1% of Invesco shares are owned by institutional investors. 57.5% of Morningstar shares are owned by company insiders. Comparatively, 1.8% of Invesco shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
Summary
Invesco beats Morningstar on 9 of the 15 factors compared between the two stocks.
Morningstar Company Profile
Morningstar, Inc. provides independent investment research services in North America, Europe, Australia, and Asia. It offers a line of data, research, and software tools on a range of investment offerings, including managed investment products, publicly listed companies, fixed income securities, private capital markets, and real-time global market data for financial advisors, asset managers, retirement plan providers and sponsors, and individual and institutional investors. The company offers Morningstar Data, an investment data spanning various investment databases, including pricing and commodity data; Morningstar Direct, an institutional investment research platform; investment management solutions, which include Morningstar Managed Portfolios, the strategist models on third-party managed account platforms, as well as services for institutional asset management, asset allocation, and manager selection; institutional asset management services for asset management firms, broker-dealers, and insurance providers; Morningstar Advisor Workstation, a Web-based investment planning system; and Morningstar.com, a Website for individual investors. It also provides Morningstar Enterprise Components, a set of tools and capabilities that builds customized Websites or enhances existing solutions; Morningstar Research, which includes equity research and manager research; Morningstar Credit Ratings that provides new issue and surveillance ratings and analysis for structured credits, as well as operational risk assessment services; Morningstar Indexes, a set of investment indexes; workplace solutions, such as retirement advice and managed accounts, fiduciary services, and custom models; a mobile application, excel plug-in, data feeds, and data solutions; equity and manager research, and credit rating services; and institutional asset management, asset allocation, and manager selection services. The company was founded in 1984 and is headquartered in Chicago, Illinois.
Invesco Company Profile
Invesco Ltd. is a publicly owned investment manager. The firm provides its services to retail clients, institutional clients, high-net worth clients, public entities, corporations, unions, non-profit organizations, endowments, foundations, pension funds, financial institutions, and sovereign wealth funds. It manages separate client-focused equity and fixed income portfolios. The firm also launches equity, fixed income, commodity, multi-asset, and balanced mutual funds for its clients. It launches equity, fixed income, multi-asset, and balanced exchange-traded funds. The firm also launches and manages private funds. It invests in the public equity and fixed income markets across the globe. The firm also invests in alternative markets, such as commodities and currencies. For the equity portion of its portfolio, it invests in growth and value stocks of large-cap, mid-cap, and small-cap companies. For the fixed income portion of its portfolio, the firm invests in convertibles, government bonds, municipal bonds, treasury securities, and cash. It also invests in short term and intermediate term bonds, investment grade and high yield bonds, taxable and tax-free bonds, senior secured loans, and structured securities such as asset-backed securities, mortgage-backed securities, and commercial mortgage-backed securities. The firm employs absolute return, global macro, and long/short strategies. It employs quantitative analysis to make its investments. The firm was formerly known as Invesco Plc, AMVESCAP plc, Amvesco plc, Invesco PLC, Invesco MIM, and H. Lotery & Co. Ltd. Invesco Ltd. was founded in December 1935 and is based in Atlanta, Georgia with an additional office in Hamilton, Bermuda.