The information in this document is the property of morningstar, inc. Bank of montreal bmostock morningstar analysis of bank of montreal bmo stocks, including quotes, news, returns, research and ratings, as well as charts, valuations, financial statements, estimates and ownership information. Our fair value estimate should be used in conjunction with our economic moat rating and our business risk rating. How to apply valuation, moat analysis and uncertainty checks to.
Identifying economic moats, or structural barriers that protect. Click the diy moat calculator tab above and jump in the shoes of a morningstar analyst. The morningstar approach to stock investing kindle edition by brilliant, heather, collins, elizabeth. In the coming weeks, our website will be presenting excerpts from the book on what makes a moat and how to identify the five sources of moat. To test your own moat finding skills, use our doityourself moat finder tool. Feb 28, 2018 pat dorsey is the former head of equity research at morningstar, and a leader in developing economic moat analysis. Morningstar views investing in the most fundamental sense. Morningstar economic moat rating in a free market economy, capital seeks the areas of highest return. Apply what youve learned from pat dorsey in little book that builds wealth and test your own skills at identifying whether or not a company has a sustainable moat. Morningstar avers that over time wide moat companies create economic value for shareholders figure 1. Moat ratings have always required signoff of committee. He also holds the chartered financial analyst cfa designation. Astock morningstar analysis of cgi inc class a gib. The morningstar wide moat focus index is unique in its use of active inputs in a passive format.
Morningstar may adjust points assigned for the economic moat as part of our analysis of the sensitivity of the credit risk to potential changes in the economic moat. The idea of an economic moat refers to how likely a company is to keep competitors at bay for an extended period. Oct 03, 2019 four components drive the star rating. Simply enter the ticker of the company you are interested in and well tell you what kind of moat that company enjoys. View the latest vaneck vectors morningstar wide moat etf moat stock price and news, and other vital information for better exchange traded fund investing. A type of sustainable competitive advantage that a business possesses that makes it difficult for rivals to wear down its market share and profit. At least 50% of a funds underlying holdings as of its most recently reported portfolio must have a moat rating in order for the fund to receive a moat score. Pat dorsey is the former head of equity research at morningstar, and a leader in developing economic moat analysis. Why moats matter is a comprehensive guide to finding great companies with economic moats, or competitive advantages.
Part 1 in an excerpt from their new book, morningstars heather brilliant and elizabeth collins explore how to identify a moat and how intangible assets can help a firm carve out a sustainable competitive advantage. Dorsey holds a masters degree in political science from northwestern university and a bachelors degree in government from wesleyan university. Top fund picks for investors seeking higherquality growth exposure. Economic moats represent sustainable competitive advantages that allow companies to.
In order to identify companies that enjoy an economic moat, morningstar assigns one of the three ratings. In earlier lessons of this series, we introduced the concept of an economic moat and the role it plays in identifying whether a business will stand the test of time. Apr 12, 2017 in his book, the little book that builds wealth, pat dorsey, a fund manager and former morningstar analyst, explained. Apr 25, 2017 morningstar has taken the concept and expounded it as a core stock selection criterion and classify stocks into categories.
Morningstar has made it the foundation of a successful stockinvesting philosophy. Michael holt, cfa, is head of global equity research with morningstar research services. To define, an economic moat is a longterm competitive advantage that allows a company to earn oversized profits over time. The vaneck vectors morningstar wide moat etf replicates as closely as possible, before fees and expenses, the price and yield performance of the morningstar wide moat focus index.
See also business risk, economic moat, morningstar rating for stocks. Quite simply, companies with a wide moat will create value for themselves and their. Andrew lane is a senior equity analyst with morningstar research services. Mwmzx vaneck morningstar wide moat fund overview mutual. Only companies with an economic moata structural competitive advantage that allows a firm. In an excerpt from their new book, morningstar s heather brilliant and elizabeth collins explore how to identify a moat and how intangible assets can help a.
Legendary investor warren buffett devised the economic moat concept. Nov 29, 2017 the morningstar wide moat focus index is unique in its use of active inputs in a passive format. Financial metrics in widemoat firms clute journals. He played an integral part in the development of the morningstar rating for stocks, as well as morningstars economic moat ratings. An economic moat is a barrier that protects a company from competition. Stocks in the portfolio are selected from 33 exchanges which qualify for inclusion using the morningstar economic moat methodology.
An economic moat provides a gauge of a companys competitive. In an excerpt from their new book, morningstars heather brilliant and elizabeth. He is chairman of morningstars economic moat committee. The vaneck morningstar wide moat fund seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the morningstar wide moat focus index sm mwmftr, which is intended to track the overall performance of attractively priced companies with sustainable competitive advantages according to morningstars. The morningstar economic moat rating represents a companys sustainable competitive advantage. But just what is an economic moat, whats behind our process for assigning it, and how have wide moat companies performed. The morningstar approach to stock investing, helps investors find superior businesses and determine when to buy them to maximize returns over the long term. The paperback of the how to select winning stocks by paul larson, morningstar, inc. Spotlight 1 morningstar advisor februarymarch 2010 international moats among the more than 2,000 companies morningstars equity analysts cover worldwide, the best have economic moatscompetitive advantages that will stand the test of time. How to find companies with strong competitive moats seeking.
Or you can register for a 2 week premium trial to morningstar. Morningstar has identified five potential sources of an economic moat, which are described below. Stock in a company with a wide economic moat is usually a much safer investment. Morningstar initiated economic moat rating in late 2002, subdividing entire coverage universe into three moat buckets. The little book that builds wealth is a simple explanation of the concept that. How the morningstar wide moat focus index performed in its. Incorporate economic moat analysis for profitable investing. A stocks, including quotes, news, returns, research and ratings, as well as charts, valuations, financial statements, estimates and ownership information. He is chairman of morningstar s economic moat committee.
When an economic moat assessment is unavailable from morningstar research services llc a subsidiary of morningstar, inc. Incorporate economic moat analysis for profitable investing why moats matter is a comprehensive guide to finding great companies with economic moats, or competitive advantages. This book explains the investment approach selection from why moats matter. Moat summary of vaneck vectors morningstar wide moat etf. Jan 01, 2014 incorporate economic moat analysis for profitable investing why moats matter is a comprehensive guide to finding great companies with economic moats, or competitive advantages.
Economic moat is a proprietary morningstar data point. There are a few sources of economic moat which will be elaborated briefly below but it is important to first understand why having an. Anyone whos read a morningstar equity research report knows that we are quite keen on the concept of economic moat. Construction rules for the morningstar singapore reit yield. Is sustainable competitive advantage an advantage for stock. Please use the link provided below to generate a unique link valid for 24hrs. For morningstar, investing is about holding shares in great businesses for long periods of time. Introduce morningstars approach to investing establish the. Whenever a company develops a profitable product or service, it doesnt take long before competitive forces drive down its economic profits. From the economic moat rating to the morningstar wide moat focus index given our universe of stocks receiving an economic moat rating of wide, morningstar has created an index that consists of the 20 stocks that are trading at the. A company with an economic moat can fend off competition and earn high returns on capital for many years to come. Morningstar defines the economic moat rating and identifies five sources of moats.
You can check your assessment by plugging the ticker into the morningstar moat finder tool to see what economic moat morningstar has assigned the company. Nov 01, 2016 morningstars economic moat is divided into three ratings. Book value, the net reproduction value and the epv are compared to determine whether. Ebay has the network effect, whereby the auction site is the one to. On this book, morningstar shares the ins and outs of its moatpushed funding philosophy, which readers can use to decide good stock picks for his or her very personal portfolios. Just as moats around medieval castles kept the opposition at bay, economic.
The idea of an economic moat refers to how likely a company is to keep competitors at bay for an extended. I wanted morningstars economic moat to include a trusted brand, large financial databases, proprie tary analytics, a sizable and knowledgeable analyst staff, and. Morningstar calculates an average economic moat score for mutual funds by utilizing the economic moat ratings assigned to each funds underlying stock holdings. The morningstar analysts estimate of what the stock is worth.
So thats what i was doing and i added an additional filter to look for stocks with 4 stars or above in addition to having a wide moat. How to select winning stocks by paul larson, morningstar. In an excerpt from their new book, morningstars heather brilliant and elizabeth collins explore how to identify a moat and how intangible assets can help a. He is a member of the editorial board of morningstar magazine. The cfa institute published their findings earlier this year in a book. Morningstar has an economicmoat rating that sorts companies into three groupswide moat, narrow moat. A cgi inc class a stock price quote shares xtse morningstar. Moat tracks a staggered, equalweighted index of 40 companies that morningstar determines to have the highest fair value among firms with a sustainable competitive advantage.
These companies will keep competitors at bay for years, allowing them to earn excess returns. Youll instantly see the rating morningstar stock analysts have assigned the company. How to find companies with strong competitive moats. Morningstar has taken the concept and expounded it as a core stock selection criterion and classify stocks into categories. Well also provide you with a few of the data points that our analysts use to determine a companys moat. Morningstars economic moat theories are founded on 5 principles. How to select winning stocks by paul larson, morningstar, inc. In his book, the little book that builds wealth, pat dorsey, a fund manager and former morningstar analyst, explained. Analyzing morningstars economic moat rating market realist. Morningstar financial research, analysis, data and news.