What’s the Difference Between Zacks and Morningstar?

They both provide data on stocks and funds, but there are differences

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If you do your own research on stocks, mutual funds, or ETFs, you know the importance of having access to data. Two common online research tools are Zacks Investment Research and Morningstar, Inc. Which one should you use, and when? Learn more about each one to find out which is better for you.

Key Takeaways

  • Zacks Investment Research and Morningstar Inc. are two of the most popular online investment research tools.
  • Zacks is best known for its ranking system, which helps investors find stocks, mutual funds, and ETFs that are rising quickly.
  • Morningstar's star-rating system evaluates securities based on their rewards vs. the risk.
  • Zacks costs more and is geared toward skilled investors; Morningstar is more affordable and can help a broader range of people.

What Is Zacks Investment Research?

Zacks Investment Research (ZIR) is a research and analysis company that provides information about stocks, mutual funds, and ETFs. ZIR was founded in 1978 by Leonard Zacks. It offers free and paid services that include research, financial data, and analysis to help you make decisions about your investments.

Zacks may be best known for the system it calls Zacks Rank. This rating system is built upon the idea that stocks with rising earnings estimates can outperform the S&P 500. It also has ranking systems for mutual funds and ETFs. Zacks may be used by people who work in the industry, but independent investors can also use it.

According to Zacks, the Rank has more than doubled the S&P 500 for more than 25 years.

The Pros and Cons of Zacks

Zacks Investment Research can be a useful tool for investment-related information and analysis. It may not be ideal for you unless you're a skilled investor.

Pros

  • Zacks Rank: This rating system for stocks, mutual funds, and ETFs can help you find more assets to include in your portfolio.
  • Variety of member services: You can sign up for and take advantage of some free services. These include a daily newsletter, timely articles, and Zacks Rank. To become a member, you'll need to pay for Zacks Premium ($249 per year), Zacks Investor Collection ($495 per year) or Zacks Ultimate ($2,995 per year). Members get access to exclusive commentary and investment tools.
  • Easy site navigation: The Zacks website is easy to navigate which lets you quickly find the information you're looking for.

Cons

  • Not ideal for beginners: Besides a handful of starter articles, you might not find much useful information on the Zacks website if you're new to investing.
  • Cost of Premium, Investor, and Ultimate services: It doesn't make sense to pay nearly $3,000 per year for the Ultimate member package unless you really need the information. While the Investor and Premium are more affordable, they're still unnecessary if you're new or buy and hold your stocks.

What Is Morningstar?

Morningstar Inc. is an investment research firm that has a variety of information. You can find financial analysis and information about stocks, mutual funds, and ETFs on its website. Morningstar (MORN) is a publicly owned company founded by Joe Mansueto in 1984 and based in Chicago, Illinois.

The founder of Morningstar, stock analyst Joe Mansueto, was only 27 years old when he decided to start the company right out of his apartment.

Morningstar rose to stardom in the community with its star rating. This rating system ranges from one to five stars and is based upon historical performance and market risk. Morningstar has become one of the best online investor research sites. It offers ratings and research for stocks, ETFs, mutual funds, and more.

The Pros and Cons of Using Morningstar

Morningstar attracts investors that range from beginners to money managers who need investment data and analysis. While many use the website, it can be tough to find what you're looking for until you get used to it.

Pros

  • Star rating: It's easy to assess the risk/reward an investment has by reviewing Morningstar’s Rating (one through five stars).
  • Versatility: It caters to all kinds of people. Beginners, skilled investors, and wealth managers can all find what they're looking for.
  • Variety of products: Morningstar offers tons of free information to you as you navigate its website. It also offers a free basic membership where you can unlock more data, which includes its star ratings. You can also connect your portfolio to Morningstar data and access article archives. If you need more, you can become a member to get analyst reports, investment picks, and more advanced screens. A one-year premium membership costs $199.

Cons

  • Poor site navigation: It is not easy for you to find information on its site if you're new. The home page is overloaded with articles, and site navigation is not intuitive. Once you decide to subscribe to a membership program and use the site more, it's easier to find what you need.
  • Declining focus on beginners: There are so many different investment types and goings-on to read about that new personal investors might get lost. For instance, if you're looking for an article that explains the concept of beta, you might be out of luck. Even a site search for beta directs you to more advanced topics.

Differences Between Zacks and Morningstar

Zacks Investment Research and Morningstar, Inc. are similar in that they both provide investment-related data, research, and analysis. However, they differ in a handful of ways.

Key Differences

  • Ratings: The Zacks Rating may be best for stocks and is based on rising earnings. Morningstar’s star rating may be best for mutual funds and ETFs; it's also based on risk to returns.
  • Type of investor: Zacks is geared toward skilled investors, short-term traders, and professional investors. Morningstar can be for all types of investors, including long-term individual investors and investment advisors.
  • Investment research and layout: Both Zacks and Morningstar offer free and paid member services, but the information is presented differently. For example, when reviewing a mutual fund, Zacks shows much more on the main quote page. Morningstar makes you click on different tabs to find what you're looking for.

The Bottom Line

Zacks and Morningstar both offer investors powerful tools for research and analysis. Both offer free and paid member services and have a variety of information. However, Zacks may be best for adept investors who trade stocks. Morningstar may be best for newer investors who buy and sell mutual funds and ETFs.