Critical Review: Morningstar (NASDAQ:MORN) and Verisk Analytics (NASDAQ:VRSK)

Morningstar (NASDAQ:MORN) and Verisk Analytics (NASDAQ:VRSK) are both large-cap business services companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, dividends, valuation, analyst recommendations, institutional ownership, risk and profitability.

Analyst Recommendations

This is a breakdown of current recommendations for Morningstar and Verisk Analytics, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Morningstar	0	1	2	0	2.67
Verisk Analytics	1	5	5	0	2.36

Morningstar currently has a consensus price target of $361.67, suggesting a potential upside of 40.65%. Verisk Analytics has a consensus price target of $306.91, suggesting a potential upside of 17.05%. Given Morningstar’s stronger consensus rating and higher possible upside, research analysts clearly believe Morningstar is more favorable than Verisk Analytics.

Profitability

This table compares Morningstar and Verisk Analytics’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Morningstar	17.22%	23.54%	10.52%
Verisk Analytics	30.67%	460.89%	20.80%

Dividends

Morningstar pays an annual dividend of $1.82 per share and has a dividend yield of 0.7%. Verisk Analytics pays an annual dividend of $1.80 per share and has a dividend yield of 0.7%. Morningstar pays out 19.4% of its earnings in the form of a dividend. Verisk Analytics pays out 27.7% 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. Morningstar has raised its dividend for 16 consecutive years and Verisk Analytics has raised its dividend for 6 consecutive years. Morningstar is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Morningstar has a beta of 1.01, indicating that its share price is 1% more volatile than the S&P 500. Comparatively, Verisk Analytics has a beta of 0.86, indicating that its share price is 14% less volatile than the S&P 500.

Insider and Institutional Ownership

57.0% of Morningstar shares are held by institutional investors. Comparatively, 90.0% of Verisk Analytics shares are held by institutional investors. 36.2% of Morningstar shares are held by insiders. Comparatively, 0.5% of Verisk Analytics shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Morningstar and Verisk Analytics”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Morningstar	$2.28 billion	4.77	$369.90 million	$9.39	27.38
Verisk Analytics	$2.88 billion	12.71	$958.20 million	$6.49	40.40

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

Summary

Verisk Analytics beats Morningstar on 9 of the 17 factors compared between the two stocks.

About Morningstar

Morningstar, Inc. provides independent investment insights in the United States, Asia. Australia, Continental Europe, the United Kingdom, and internationally. The company operates in five segments: Morningstar Data and Analytics; PitchBook; Morningstar Wealth; Morningstar Credit; and Morningstar Retirement. The company offers managing investments, including mutual funds, ETFs, separate accounts, collective investment trusts, model portfolios, equities, and fixed income securities; Morningstar Direct is an investment-analysis and reporting platform; Morningstar Advisor Workstation, a suite of tool to provide help and advice. The PitchBook segment provides data and research covering the private capital markets comprising venture capital, private equity, private credit and bank loans, and merger and acquisition activities; and pitchbook platform. It provides model portfolios and wealth platforms; Morningstar Managed Portfolios, an advisor service with model portfolios designed for fee-based independent financial advisors; and Morningstar.com that discovers, evaluates, and monitors stocks, ETFs, and mutual funds; build and monitor portfolios and markets. In addition, the company provides credit ratings, research, data, and credit analytics solutions; Morningstar DBRS which offers securitizations and other structured finance instruments, such as asset-backed securities, residential mortgage-backed securities, commercial mortgage-backed securities, and collateralized loan obligations. Further, it offers managed retirement accounts, fiduciary services, Morningstar Lifetime Allocation funds, and custom models; Morningstar Indexes offers market indexes used for performance benchmarks and as the basis for investment products and other portfolio strategies; and Morningstar Sustainalytics provides environmental, social and governance data, research, analysis, and insights. Morningstar, Inc. was incorporated in 1984 and is headquartered in Chicago, Illinois.

About Verisk Analytics

Verisk Analytics, Inc. provides data analytics and technology solutions to the insurance markets in the United States and internationally. It offers policy language, prospective loss costs, policy writing and rating rules, and various underwriting solutions for risk selection and segmentation, pricing, and workflow optimization; property- and auto- specific rating and underwriting information solutions that allows clients to understand, quantify, underwrite, mitigate, and avoid potential loss for risks; catastrophe modeling solutions, which enables companies to identify, quantify, and plan for the financial consequences of catastrophes for use by insurers, reinsurers, intermediaries, financial institutions, and governments. The company also provides life insurance solutions for transforming current workflows in life insurance underwriting, claim insights, policy administration, unclaimed property/equity, compliance and fraud detection, and actuarial and portfolio modeling; Marketing Solutions, such as compliant, real-time decisioning, profitability, and risk assessment for inbound consumer interactions; and international underwriting and claims solutions. In addition, it offers claims insurance solutions, which provides analytics in fraud detection, compliance reporting, subrogation liability assessment, litigation, and repair cost estimation and valuation solutions; and casualty solutions, such as compliance, casualty claims decision support, and workflow automation solutions. Further, the company supplies software to the specialty insurance market. The company was founded in 1971 and is headquartered in Jersey City, New Jersey.