Morningstar Shares Jump on Strong Earnings Report

Shares of Morningstar Inc. leaped nearly 16% on Wednesday after the mutual fund and stock research firm reported sharp increases in earnings and revenue for the second quarter.

The company’s stock rose $4.33 to $31.55 after reaching an all-time high of $32. The shares are up more than 70% from their initial price of $18.50 when the company went public in May.

Morningstar’s net income for the April-through-June quarter was $9.5 million, or 22 cents a share, compared with $1.3 million, or 3 cents, in the same period a year earlier. Revenue rose 30% to $56.2 million from $43.2 million in the second quarter of 2004.

Not enough analysts follow the small company for Wall Street to compile estimates on Morningstar. But the market clearly was impressed; the trading volume of more than 628,000 shares bought and sold was more than 20 times the usual amount.

Chairman and Chief Executive Joe Mansueto said revenue growth was strong in all three of Morningstar’s business areas. The biggest increase of 57% came in the individual investor segment, reflecting new revenue from equity research.

The company’s quarterly earnings report made no mention of the three subpoenas it has received in the last eight months from New York Atty. Gen. Eliot Spitzer, the Labor Department and the Securities and Exchange Commission.

The three probes are believed to be related to Morningstar’s consulting work for retirement plan sponsors.

Morningstar spokeswoman Margaret Kirch Cohen said the company was cooperating with the investigations.