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Head-To-Head Contrast: Morningstar (MORN) and Broadridge Financial Solutions (BR)

Morningstar (NASDAQ: MORN) and Broadridge Financial Solutions (NYSE:BR) are both mid-cap business services companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, dividends, valuation, risk, analyst recommendations, earnings and profitability.

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Analyst Ratings

This is a summary of recent ratings for Morningstar and Broadridge Financial Solutions, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Morningstar 0 0 0 0 N/A
Broadridge Financial Solutions 0 3 0 0 2.00

Broadridge Financial Solutions has a consensus target price of $74.00, suggesting a potential downside of 9.02%. Given Broadridge Financial Solutions’ higher possible upside, analysts plainly believe Broadridge Financial Solutions is more favorable than Morningstar.

Earnings and Valuation

This table compares Morningstar and Broadridge Financial Solutions’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Morningstar $847.00 million 4.27 $228.30 million $3.82 22.27
Broadridge Financial Solutions $4.14 billion 2.29 $704.70 million $2.73 29.79

Broadridge Financial Solutions has higher revenue and earnings than Morningstar. Morningstar is trading at a lower price-to-earnings ratio than Broadridge Financial Solutions, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

38.3% of Morningstar shares are owned by institutional investors. Comparatively, 83.8% of Broadridge Financial Solutions shares are owned by institutional investors. 57.4% of Morningstar shares are owned by company insiders. Comparatively, 3.5% of Broadridge Financial Solutions shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Morningstar and Broadridge Financial Solutions’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Morningstar 19.43% 15.55% 8.52%
Broadridge Financial Solutions 7.89% 37.99% 12.30%

Risk and Volatility

Morningstar has a beta of 0.75, suggesting that its stock price is 25% less volatile than the S&P 500. Comparatively, Broadridge Financial Solutions has a beta of 0.97, suggesting that its stock price is 3% less volatile than the S&P 500.

Dividends

Morningstar pays an annual dividend of $0.92 per share and has a dividend yield of 1.1%. Broadridge Financial Solutions pays an annual dividend of $1.46 per share and has a dividend yield of 1.8%. Morningstar pays out 24.1% of its earnings in the form of a dividend. Broadridge Financial Solutions pays out 53.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Broadridge Financial Solutions has raised its dividend for 9 consecutive years. Broadridge Financial Solutions is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Broadridge Financial Solutions beats Morningstar on 10 of the 15 factors compared between the two stocks.

About Morningstar

Morningstar, Inc. is a provider of independent investment research in North America, Europe, Australia, and Asia. The Company focuses to create products that help investors reach their financial goals. It offers a range of data, software, research, and investment management offerings for financial advisors, asset managers, sponsors, and individual investors. It provides data and research insights on a range of investment offerings, including managed investment products, listed companies, capital markets, and real-time global market data. It conducts its business operations outside of the United States through subsidiaries in countries, including Australia, Brazil, Canada, Chile, Denmark, France, Germany, India, Italy, Japan, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, People’s Republic of China (both Hong Kong and the mainland), Singapore, South Africa, South Korea, Spain, Sweden, Switzerland, Taiwan, Thailand, the United Arab Emirates, and the United Kingdom.

About Broadridge Financial Solutions

Broadridge Financial Solutions, Inc. (Broadridge) is a provider of investor communications and technology-driven solutions to banks, broker-dealers, mutual funds and corporate issuers. The Company’s segments include Investor Communication Solutions, and Global Technology and Operations. The Company offers Bank/Broker-Dealer Investor Communication Solutions, Customer Communication Solutions, Corporate Issuer Solutions, Advisor Solutions and Mutual Fund and Retirement Solutions through Investor Communication Solutions segment. The Company offers a middle- and back-office securities processing platform for North American and global broker-dealers. Its services include investor and customer communications, securities processing, and data and analytics solutions. The Company delivers a range of solutions that helps its clients serve their retail and institutional customers across the entire investment lifecycle, including pre-trade, trade, and post-trade processing functionality.