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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 July 20.

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.

$65 Billion
Morningstar and PitchBook analysts teamed up to analyze Airbnb ahead of a potential IPO, likely in 2019 or 2020. They believe the firm has built a powerful enough network effect to earn a narrow economic moat and think the business is valued between $53 billion and $65 billion. Dan Wasiolek writes:


"We believe Airbnb’s IPO should be on the radar screens for investors seeking exposure to a company positioned to gain share in the nearly $700 billion global online travel market, which we estimate will grow 9.4% annually on average over the next five years."


Christine Benz, Morningstar's director of personal finance, took a look at four pieces of financial advice she inherited from her parents that may, or may not, have been on point. One of the ones that didn't hold up? Always buy as much house as you can afford.

Pharmaceutical firms have been grappling with security over high prices for branded drugs, and Morningstar's Karen Andersen sees the landscape for negotiation discounts with payers has become more competitive. But she highlights that the best firms, are keeping profitability high with using manufacturing improvements.


"Overall, across the industry, we see gross margins staying relatively steady at a strong 76% over the next five years, as manufacturing improvements and very strong, 95%-plus gross margins on many differentiated and effective therapies counter increased headwinds from pricing on older products and royalty and profit share payments to partners."

In a look at our top dividend ideas in the utility sector, Travis Miller flags PPL as worth further exploration for investors.


"The biggest value play, we think, right now in the utilities sector is PPL. Again, a large-cap name, trading with a yield at 5.5%. There's some concern in the market about their operations in the United Kingdom. We still think the growth can be over 6% over the next few years."


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