Switch to:
GuruFocus has detected 1 Warning Sign with Morningstar Inc $MORN.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
Morningstar Inc (NAS:MORN)
Peter Lynch Fair Value
$43.33 (As of Today)

Peter Lynch Fair Value applies to growing companies. The ideal range for the growth rate is between 10 - 20% a year. Peter Lynch thinks that the fair P/E value for a growth company equals its growth rate, that is PEG = 1. The earnings here is trailing twelve month (TTM) earnings. The growth rate we use is the average growth rate for earnings per share over the past 5 years. If 5-Year Earnings Growth Rate is greater than 25% a year, we use 25. If 5-Year Earnings Growth Rate is smaller than 5% a year, we do not calculate Peter Lynch Fair Value.

Here, as of today, Morningstar Inc's PEG is 1. Morningstar Inc's 5-Year EBITDA Growth Rate is 12.45. Morningstar Inc's Earnings Per Share without Non-Recurring Items (NRI) for the trailing twelve months (TTM) ended in Mar. 2017 was $3.48. Therefore, the Peter Lynch Fair Value for today is $43.33.

As of today, Morningstar Inc's share price is $72.98. Morningstar Inc's Peter Lynch fair value is $43.33. Therefore, Morningstar Inc's Price to Peter Lynch Fair Value Ratio for today is 1.68.

MORN' s Price-to-Peter-Lynch-Fair-Value Range Over the Past 10 Years
Min: 0.71   Max: 7.57
Current: 1.68

0.71
7.57

During the past 13 years, the highest Price to Peter Lynch Fair Value Ratio of Morningstar Inc was 7.57. The lowest was 0.71. And the median was 2.90.

MORN's Price-to-Peter-Lynch-Fair-Value is ranked lower than
58% of the 154 Companies
in the Global Business Services industry.

( Industry Median: 1.53 vs. MORN: 1.68 )

Note: Please don't confuse Peter Lynch Fair Value with the value reached in Peter Lynch Chart.


Definition

Morningstar Inc's Peter Lynch Fair Value for today is calculated as

Peter Lynch Fair Value=PEG*5-Year EBITDA Growth Rate*Earnings Per Share (NRI) (TTM)
=1*12.45*3.48
=43.33

Morningstar Inc's Earnings Per Share (NRI) for the trailing twelve months (TTM) ended in Mar. 2017 was 0.73 (Jun. 2016 ) + 0.7 (Sep. 2016 ) + 1.63 (Dec. 2016 ) + 0.42 (Mar. 2017 ) = $3.48.

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

If 5-Year Earnings Growth Rate is greater than 25% a year, we use 25.

If 5-Year Earnings Growth Rate is smaller than 5% a year, we do not calculate Peter Lynch Fair Value.

Please note that we use the 5-year average growth rate of EBITDA per share as the growth rate. EBITDA growth is subject to less manipulations than net earnings per share. In the calculation, PEG=1 because Peter Lynch thinks that the fair P/E ratio of the growth stock is equal to its earnings growth rate.


Explanation

Peter Lynch Fair Value applies to growing companies. The ideal range for the growth rate is between 10 - 20% a year.

Peter Lynch thinks that the fair P/E value for a growth company equals its growth rate, that is PEG = 1. The earnings here is trailing twelve month (TTM) earnings. The growth rate we use is the average growth rate for earnings per share over the past 5 years.

Please don't confuse Peter Lynch Fair Value with the value reached in Peter Lynch Chart. In Peter Lynch chart, a fixed P/E ratio of 15 is used to draw the Earnings Line. Therefore the value reached has a P/E ratio of 15. But in Peter Lynch Fair Value calculation, P/E equals to the growth rate of EBITDA over the past 5 years, which is 12.45 instead of 15 in this case.

Morningstar Inc's Price to Peter Lynch Fair Value Ratio for today is calculated as

Price to Peter Lynch Fair Value=Share Price/Peter Lynch Fair Value
=72.98/43.33
=1.68

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


Related Terms

Earnings Per Share (NRI), peg, Median P/S Value, Intrinsic Value (DCF Projected), Intrinsic Value (DCF), Intrinsic Value (DE), Graham Number


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Morningstar Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
lynchvalue N/A47.0041.2532.3216.69N/A20.9110.4824.7543.42

Morningstar Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
lynchvalue 10.4810.1618.6321.2924.7527.1528.9630.5343.4243.33
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GF Chat

FEEDBACK