Morningstar

Morningstar (Nasdaq: MORN) has evolved from a mutual fund research resource into a provider of financial data on more than 250,000 different investment vehicles (such as stocks and hedge funds), a resource for both individual and institutional investors, and an investment manager in its own right. This is making Morningstar more profitable than ever.

Morningstar grew its annual revenues 38 percent in fiscal 2007, with profits rising 38 percent and operating profit margin jumping 51 percent. CEO Joe Mansueto explained, "Our Institutional segment continued to drive revenue and operating margin increases." Within that segment, Morningstar's investment-con- sulting businesses, Morningstar Associates and Ibbotson Associates, contributed 24 percent of the year's revenue growth.

It's also helping Morningstar churn out more and more cash profit from its business. Free cash flow totaled $101 million for the year. With the company recently valued at about 28 times free cash flow and expected to grow its profits at perhaps 26 percent per year long term, Morningstar is beginning to look fairly valued once again and is considerably cheaper than rivals such as TheStreet.com.

While we wouldn't mind seeing Morningstar's stock drop a bit further, to build up a bit of a margin of safety, we're at a point where the market is offering a good price on a great company.