Morningstar | ASX's Wide Economic Moat Will Continue to Protect Margins and Mid-Single-Digit EPS Growth
We expect ASX to deliver a mid-single-digit EPS compound annual growth rate over the next five years, with its wide economic moat protecting strong margins and enabling returns on invested capital to exceed the weighted average cost of capital. The capital-light business model, along with a lack of desire to undertake acquisitions, should enable strong cash conversion, a 90% dividend payout ratio, and a debt-free balance sheet. The yield nature of the stock means we expect the share price to be largely driven by bond market movements and central bank interest rates. We don't expect competition to materially undermine earnings, despite the evolving regulatory and competitive landscape. We expect long-term growth in market value to underpin EPS growth. The relatively reliable nature of earnings influences our medium fair value uncertainty rating.ASX is a multi-asset class and exchange group. Co.'s principal activities are: providing securities exchange and ancillary services; derivatives exchange and ancillary services; central counterparty clearing services; and registry, depository, settlement and delivery-versus-payment clearing of financial products. Co. services companies and other issuers that list equity and debt securities on the exchange, as well as retail and institutional investors that invest in and trade those securities. While its operations are primarily based in Australia, Co. services both domestic and international customers, and some of its services are accessible from offshores.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
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