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Morningstar Australasia Introduces Stewardship Ratings for Australian, New Zealand Stocks

Morningstar Australasia Pty Limited, a subsidiary of Morningstar, Inc. (NASDAQ: MORN), a leading provider of independent investment research, today launched Stewardship Ratings for Australian and New Zealand stocks. The ratings assess a firm’s stewardship of shareholder capital as Exemplary, Standard, or Poor. In the initial allocations, 13 Australian and New Zealand companies received Exemplary ratings. Eighteen were designated Poor, and a further 198 companies were designated Standard.

The Morningstar Stewardship Rating methodology focuses on a company’s capital allocation decisions and specific factors such as financial leverage, investment strategy, investment timing and valuation, dividend and share buyback policies, execution, compensation, related party transactions, and accounting practices. Morningstar publishes analysis supporting the ratings in the ‘Stewardship’ section of company research reports.

“The Stewardship Rating enables Australian and New Zealand advisers and brokers, institutional investors, and individual investors to screen and monitor the quality of capital allocation decisions by management teams and construct and manage portfolios of high-quality investments,” Joel Bloomer, Morningstar Head of Equity and Credit Research, Asia-Pacific, said. “As one of our innovative global equity research initiatives, the Stewardship Rating deploys a consistent framework designed to facilitate more meaningful security comparisons, and complements the Morningstar Economic Moat Rating for stocks.”

Morningstar equity analysts assign ratings on an absolute basis, not relative to industry peers. Most companies receive a Standard rating in the absence of evidence that a management team has made exceptionally strong or poor capital allocation decisions. For example, Morningstar has assigned Australia and New Zealand Banking Group an Exemplary Stewardship Rating, reflecting the bank’s impressive focus on increasing shareholder returns and successful execution of strategy, while Kingsgate Consolidated’s poor operational and financial performance warrant a Poor rating. 

The Morningstar Stewardship Ratings for stocks are available in Morningstar® Adviser Research CentreTM, the firm’s web-based research solution for financial planning dealer groups, financial advisers, and brokers; Morningstar DirectTM, the global investment analysis platform for institutional investors; and the Morningstar.com.au website for Australian retail investors.