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Stock Strategist

Introducing Morningstar's New Stewardship Rating for Stocks

Our new rating system gets right to the heart of the matter: evaluating whether management teams are good stewards of shareholder capital.

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Today we are launching a new stewardship rating system, the Morningstar Stewardship Rating for Stocks. We will be making the transition from our previous stewardship grade system, which was derived from a somewhat more quantitative measurement of corporate governance practices, to one that focuses more heavily on the quality and depth of a company's management and board of directors in their roles as stewards of investor capital.

The new system will require our analysts to assign one of three Stewardship Ratings--exemplary, standard, or poor--based on their assessments of how each firm stacks up in regards to capital allocation decisions and stewardship of shareholder capital. We believe our stock analysts have a unique advantage in assessing and communicating a rating of this nature, given our focus on economic moats and credit quality, and expect it to be applicable for all companies, regardless of domicile, which is something that was not fully attainable with our old system.

Heather Brilliant has a position in the following securities mentioned above: F. Find out about Morningstar’s editorial policies.