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Investing Specialists

Morningstar Runs the Numbers

We take a numerical look through this week's Morningstar research. Plus, our most popular articles and videos for the week ended June 29.

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Inspired by Harper's Index (with a tip of the hat to FiveThirtyEight's Significant Digits blog), Morningstar Runs the Numbers uses a numbers-based approach to highlight recent Morningstar research, along with some outside news stories.

Our global equity coverage universe appears fairly valued, in aggregate. At the end of the second quarter, the market-cap-weighted price/fair value ratio across our coverage of roughly 1,600 stocks is 1.00, said director of North American equity research Dan Rohr. Read his take on how stocks performed in general during the quarter, and drill down into the individual sector reports for our takes on the biggest themes and best opportunities in each sector. 

We cut our fair value estimate for  General Electric (GE) by $3.30, to $15.70 per share from $19. We also downgraded our moat rating for the beleaguered company to narrow from wide. Our moat downgrade stems largely from the drag of GE Capital and recent significant revenue and margin reduction in the large revenue power segment. Our fair value estimate reduction ties to the negative contribution from GE Capital and slightly reduced revenue and margin assumptions, among other reasons.

Did you know there was a third Apple co-founder? This CNBC article tells the story of Ronald Wayne, who spent a mere 12 days working with Steve Wozniak and Steve Jobs and sold his shares back to his co-founders for $800.

New Morningstar research shows that our metrics can improve investors' success when it comes to finding high-quality companies with safe dividends. To find companies with attractive, low-risk dividends, we screen for stocks with attractive yields. Then we apply some quality screens--we focus on companies with economic moat ratings of wide or narrow, and we also consider a company's distance to default score to determine how likely a firm is to default on its liabilities. See 13 undervalued stocks that met our criteria.

$20.7 billion
U.S. equity funds enjoyed their strongest month since December 2016, collecting an estimated $20.7 billion in net inflows in May 2018, said senior manager research analyst Kevin McDevitt. Behind that headline number, passive equity funds dominated their active counterparts, collecting $29.1 billion versus outflows of $8.4 billion for active equity funds. As has been true in years past, the exodus from active funds so far in 2018 roughly matches flows into passive U.S. equity funds, McDevitt said.

Multifactor funds have grown in number, and they have also grown in assets. Alex Bryan, director of passive strategies research in North America, discusses five key questions to bear in mind when evaluating multifactor funds. (Read the full study here.)  

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Vanguard Real Estate does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.