Morningstar Significantly Expands Equity Coverage, Launches Quantitative Ratings and Reports for 28,000 Companies Globally

Chicago - 20 May 2013

Morningstar, Inc. (NASDAQ: MORN), a leading provider of independent investment research, has significantly expanded its equity coverage with the introduction of quantitative ratings and reports for approximately 28,000 companies globally. The new ratings—Quantitative Fair Value Estimate, Quantitative Valuation, Quantitative Uncertainty, Quantitative Economic Moat, and Quantitative Financial Health—are based on quantitative statistics as well as Morningstar’s proprietary, analyst-driven equity ratings.

“We’re offering a new level of equity coverage that leverages our existing analyst ratings and harnesses Morningstar’s robust global equity data on thousands of companies, allowing us to consistently apply our approach to equity analysis to a wider universe of stocks,” Haywood Kelly, Morningstar’s senior vice president of equity and credit research, said. “The new quantitative ratings are driven by our analyst ratings and complement our existing analyst ratings and analysis. The ratings can serve as a second opinion for investors to consider when evaluating a company.”

Morningstar’s new quantitative equity ratings are forward-looking and generated by a statistical model that is based on analyst-driven ratings, including Morningstar’s Fair Value Estimate, Morningstar® Economic Moat™ Rating, and Uncertainty Rating as well as financial data points such as earnings yield, average daily volume, and total return volatility, among others. The quantitative ratings are calculated daily and derived from the analyst-driven ratings of a company’s peers as determined by statistical algorithms. Morningstar will calculate quantitative equity ratings for companies whether or not it already provides analyst ratings and qualitative coverage. In some cases, the quantitative ratings may differ from the analyst ratings because a company’s analyst-driven ratings can significantly differ from other companies in its peer group.

The new quantitative equity ratings comprise:

• Quantitative Fair Value Estimate: Comparable to Morningstar’s Fair Value Estimate for stocks, which measures a company’s intrinsic value based on a discounted cash flow model, and represents the per share value of a company’s equity. The measure is expressed in the local currency.

• Quantitative Valuation: Defined as the ratio of a company’s Quantitative Fair Value Estimate to its last market close price, and similar to the analyst-driven Fair Value Estimate to last market close price ratio. The rating is expressed as Overvalued, Fairly Valued, or Undervalued.

• Quantitative Uncertainty: Describes the level of uncertainty around the Quantitative Fair Value Estimate, comparable to the Uncertainty Rating for the analyst Fair Value Estimate. The rating is expressed as Low, Medium, High, Very High, or Extreme.

• Quantitative Economic Moat: Corresponds to Morningstar’s Economic Moat rating, which measures a company’s sustainable competitive advantages. The quantitative rating is expressed as None, Narrow, or Wide.

• Quantitative Financial Health: Based on Morningstar’s proprietary measure of the likelihood of financial distress. The quantitative rating is expressed as Weak, Moderate, or Strong.

The new Quantitative Equity Research Report includes Morningstar’s quantitative equity ratings, along with comparisons to aggregate scores for the entire universe of rated companies as well as a company’s sector and country. The report also includes five years of historical financial data and a Competitive Advantage Trend chart, which displays the historical values of the Quantitative Economic Moat over the last seven years.

The quantitative equity ratings and reports are available through Morningstar data feeds, and the ratings are available in Morningstar DirectSM, its global investment analysis platform for institutional investors. Morningstar plans to add the quantitative equity ratings and reports to Morningstar OfficeSM, its investment planning and research platform for financial advisors, and Morningstar® Analyst Research CenterSM for stocks within Morningstar® Advisor WorkstationSM later this year. Quantitative ratings for companies for which Morningstar doesn’t provide analyst coverage will be available later this year through the Premium Membership on individual investor website Morningstar.com®.

Morningstar launched its equity research in 1998 and now has about 120 global equity and credit analysts who provide qualitative analyst coverage of approximately 1,700 companies.

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