Morningstar Releases New Stock Diagnostic Tool

May 22, 2003 ( - Morningstar has pulled back the curtain on a new diagnostic tool to be implemented in the Quicktake reports for stocks.

Stock Diagnostics is a text-based tool that provides context to statistics, methodology, and long-term performance information and helps investors understand financial terms, according to a news release. Topics covered include:

  • Performance – The stock’s historical returns are compared with its industry and the S&P 500 Index.
  • Valuation – Ratios such as forward price/earnings, price/sales and price/cash flow are used to determine whether a stock is overvalued, undervalued or fairly valued.
  • Profitability – Calculations such as five-year return on assets (ROA), and five-year average net-margin determine how much money the company has made for shareholders compared with its industry peers.
  • Morningstar Style Box – The proprietary nine-square grid captures the style characteristics of an individual stock in terms of value, core, or growth orientation and market capitalization and compares this data with other companies in its industry.
  • Earnings Trends – Analyst earnings estimates provided by Multex, highlighted to show potential weak or strong points in a stock.
  • Dividends – A company’s dividend yield and five-year dividend growth percentages are compared with its peers’.

The new tool will be offered free for a time at the company’s Web site, .   Then it will only be available to Morningstar Premium Members.