How to Use Morningstar to Evaluate a Stock
Go to the Morningstar website., Under the Morningstar logo is a small white box titled "Quotes.", Click on "Financial Statements" along the left side of that page., Examine the bar graphs representing the revenue picture., Look at earnings, the...
Step-by-Step Guide
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Step 1: Go to the Morningstar website.
Enter the symbol of a stock you're interested in.
This is usually a three- or four-letter symbol (such as "AAPL" for Apple, Inc. or "XOM" for Exxon Mobil Corp.) If you don't know the symbol, enter the name of the stock.
This will bring you to a page of symbols and allow you to click on the appropriate one.
You'll then be shown a summary page, "Quote and News." This provides you with the latest price, market capitalization, P/E ratio, price/sales ratio and even a price/cash-flow ratio. , This takes you to the "10-Yr Income" tab.
For an interesting long-term view, the "5-Yr Restated" page is helpful.
Click on the fourth tab over above the bar graph which is the "5-Yr Restated" financials page. , Figure out what you're looking for: it depends on what type of growth you want. , Again, what you are looking for will determine the value of the stock. , While not essential for a successful stock investment, a stream of increasing dividends may suggest a future stock price increase. , A solid company usually will not need to be rapidly increasing its number of shares.
This dilutes the earnings of existing stockholders and may be a negative influence on stock price performance.
On the other hand, a company that is reducing its number of shares may cause its stock price to increase. , This section lets you know whether the company is generating or "burning" its available cash.
You might want to stick to companies that are "free cash flow" positive (and even growing). , Simply put, a company is healthier if it has more assets than liabilities and more cash and current assets than current and long-term liabilities. , A company that is able to pay off all of its current and long-term liabilities with its cash is the most financially solvent of all. -
Step 2: Under the Morningstar logo is a small white box titled "Quotes."
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Step 3: Click on "Financial Statements" along the left side of that page.
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Step 4: Examine the bar graphs representing the revenue picture.
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Step 5: Look at earnings
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Step 6: the fifth line down.
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Step 7: Review the dividends line.
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Step 8: Monitor the number of shares outstanding.
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Step 9: The next section is called "Cash Flow $Mil".
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Step 10: Look at the balance sheet.
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Step 11: Calculate the "current ratio" by dividing the total of cash and current assets by the current liabilities.
Detailed Guide
Enter the symbol of a stock you're interested in.
This is usually a three- or four-letter symbol (such as "AAPL" for Apple, Inc. or "XOM" for Exxon Mobil Corp.) If you don't know the symbol, enter the name of the stock.
This will bring you to a page of symbols and allow you to click on the appropriate one.
You'll then be shown a summary page, "Quote and News." This provides you with the latest price, market capitalization, P/E ratio, price/sales ratio and even a price/cash-flow ratio. , This takes you to the "10-Yr Income" tab.
For an interesting long-term view, the "5-Yr Restated" page is helpful.
Click on the fourth tab over above the bar graph which is the "5-Yr Restated" financials page. , Figure out what you're looking for: it depends on what type of growth you want. , Again, what you are looking for will determine the value of the stock. , While not essential for a successful stock investment, a stream of increasing dividends may suggest a future stock price increase. , A solid company usually will not need to be rapidly increasing its number of shares.
This dilutes the earnings of existing stockholders and may be a negative influence on stock price performance.
On the other hand, a company that is reducing its number of shares may cause its stock price to increase. , This section lets you know whether the company is generating or "burning" its available cash.
You might want to stick to companies that are "free cash flow" positive (and even growing). , Simply put, a company is healthier if it has more assets than liabilities and more cash and current assets than current and long-term liabilities. , A company that is able to pay off all of its current and long-term liabilities with its cash is the most financially solvent of all.
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