Morningstar’s Profit Triples; Sales Rise 32%

Investment researcher Morningstar Inc. said Thursday that its first-quarter profit more than tripled to $13.4 million, aided by strong sales of its products to financial advisors and institutions.

The mutual fund and stock research company reported a 32% jump in revenue because of a recent acquisition and strong growth.

Net income was 29 cents a share, up from $4 million, or 9 cents, a year earlier. Revenue increased to $70.1 million from $53.2 million.

Joe Mansueto, Morningstar’s chairman and chief executive, said its acquisition of asset allocation research firm Ibbotson Associates helped generate more business during the quarter. The acquisition contributed $500,000 in Morningstar’s individual segment, $1.5 million in the advisor segment and $2.4 million in the institutional segment.

He said strong organic growth -- excluding contributions from Ibbotson and foreign currency translations -- caused revenue to rise 24% during the quarter. The biggest driver of profit during the period was its institutional business, in which revenue rose 37% to $22.3 million.

Morningstar’s results also were helped by a decline in stock-based compensation expense to $3 million from $4.9 million a year ago, which the company attributed to a change in accounting since its initial public offering May 3, 2005.

The company is awaiting the outcome of related investigations by New York Atty. Gen. Eliot Spitzer, the Securities and Exchange Commission and the Labor Department. The three subpoenaed the company between December 2004 and May 2005 seeking information and documents about the investment consulting services Morningstar offers to retirement plan providers, including fund lineup recommendations for retirement plan sponsors.

Morningstar spokeswoman Margaret Kirch Cohen said Thursday that the company has continued to cooperate with the investigations.

Morningstar shares rose $2.53 to $45.28.