Analyzing Morningstar (NASDAQ:MORN) and Trinity Capital (NASDAQ:TRIN)

Trinity Capital (NASDAQ:TRIN) and Morningstar (NASDAQ:MORN) are both finance companies, but which is the superior stock? We will compare the two companies based on the strength of their profitability, risk, valuation, dividends, analyst recommendations, earnings and institutional ownership.

Insider & Institutional Ownership

24.6% of Trinity Capital shares are owned by institutional investors. Comparatively, 57.0% of Morningstar shares are owned by institutional investors. 4.3% of Trinity Capital shares are owned by company insiders. Comparatively, 38.8% of Morningstar shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Trinity Capital and Morningstar”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Trinity Capital	$216.31 million	7.71	$135.60 million	$1.75	10.07
Morningstar	$2.45 billion	3.13	$374.20 million	$10.56	19.30

Morningstar has higher revenue and earnings than Trinity Capital. Trinity Capital is trading at a lower price-to-earnings ratio than Morningstar, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Trinity Capital and Morningstar’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Trinity Capital	43.45%	14.94%	6.69%
Morningstar	16.43%	38.57%	12.22%

Risk & Volatility

Trinity Capital has a beta of 0.61, meaning that its stock price is 39% less volatile than the S&P 500. Comparatively, Morningstar has a beta of 1, meaning that its stock price has a similar volatility profile to the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Trinity Capital and Morningstar, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Trinity Capital	1	1	4	1	2.71
Morningstar	0	1	2	0	2.67

Trinity Capital presently has a consensus price target of $16.67, suggesting a potential downside of 5.38%. Morningstar has a consensus price target of $227.33, suggesting a potential upside of 11.53%. Given Morningstar’s higher possible upside, analysts plainly believe Morningstar is more favorable than Trinity Capital.

Dividends

Trinity Capital pays an annual dividend of $2.04 per share and has a dividend yield of 11.6%. Morningstar pays an annual dividend of $2.00 per share and has a dividend yield of 1.0%. Trinity Capital pays out 116.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Morningstar pays out 18.9% of its earnings in the form of a dividend. Trinity Capital has increased its dividend for 1 consecutive years and Morningstar has increased its dividend for 16 consecutive years.

Summary

Morningstar beats Trinity Capital on 12 of the 18 factors compared between the two stocks.

About Trinity Capital

Trinity Capital Inc. is a business development company. It is a venture capital firm specializing in venture debt to growth stage companies looking for loans and/or equipment financing. Trinity Capital Inc. was founded in 2019 is based in Phoenix, Arizona with additional offices in the United States.

About Morningstar

Morningstar, Inc. provides independent investment insights in the United States, Asia. Australia, Continental Europe, the United Kingdom, and internationally. The company operates in five segments: Morningstar Data and Analytics; PitchBook; Morningstar Wealth; Morningstar Credit; and Morningstar Retirement. The company offers managing investments, including mutual funds, ETFs, separate accounts, collective investment trusts, model portfolios, equities, and fixed income securities; Morningstar Direct is an investment-analysis and reporting platform; Morningstar Advisor Workstation, a suite of tool to provide help and advice. The PitchBook segment provides data and research covering the private capital markets comprising venture capital, private equity, private credit and bank loans, and merger and acquisition activities; and pitchbook platform. It provides model portfolios and wealth platforms; Morningstar Managed Portfolios, an advisor service with model portfolios designed for fee-based independent financial advisors; and Morningstar.com that discovers, evaluates, and monitors stocks, ETFs, and mutual funds; build and monitor portfolios and markets. In addition, the company provides credit ratings, research, data, and credit analytics solutions; Morningstar DBRS which offers securitizations and other structured finance instruments, such as asset-backed securities, residential mortgage-backed securities, commercial mortgage-backed securities, and collateralized loan obligations. Further, it offers managed retirement accounts, fiduciary services, Morningstar Lifetime Allocation funds, and custom models; Morningstar Indexes offers market indexes used for performance benchmarks and as the basis for investment products and other portfolio strategies; and Morningstar Sustainalytics provides environmental, social and governance data, research, analysis, and insights. Morningstar, Inc. was incorporated in 1984 and is headquartered in Chicago, Illinois.