Want to invest in stocks, ETFs, and mutual funds, but need some advice to help you invest? Zacks and Morningstar are two of the top investment advice services available today. Both are designed for self-directed market research, but they specialize in different areas.

In this guide, we’ll compare Zacks vs. Morningstar to help you decide which platform is better for you.

About Zacks and Morningstar

Zacks Investment Research is a market research firm founded in 1978 by Leonard Zacks. The company focused much of its early analysis on earnings estimate revisions, which offer opportunities for the stock price to differ from its potential valuation. Today, Zacks is best known for its quantitative stock ranking system and the company’s research is used by numerous major brokerages.

Zacks vs. Morningstar - Zacks

Morningstar was founded in 1984 by Joe Mansueto to give everyday investors access to the same financial information as professional investors. Morningstar quickly gained traction because of its simple-to-understand star rating system for mutual funds. Morningstar’s data is widely used by brokerage firms and offered as a research tool for investors. 

Zacks vs. Morningstar - Morningstar

Zacks vs. Morningstar: Stock Ranking Systems

Zacks and Morningstar both provide research on thousands of US and international stocks. At both platforms, you’ll find detailed information about companies’ price history, key financial metrics, and earnings. In addition, both Zacks and Morningstar grade stocks on a 1-5 scale (these grades are called ranks at Zacks and stars at Morningstar), but they differ in what goes into these ratings.

At Zacks, ratings are based on a combination of 3 factors: value, growth, and momentum. Value represents how a company’s stock price compares to its fair value, which is calculated by Zacks analysts. Growth looks at earnings growth over time, with special attention paid to earnings estimate revisions. Momentum looks at technical factors to offer a sense of whether a stock is experiencing bullish or bearish price action over a monthly timeframe.

Zacks vs. Morningstar - Zacks Stock Summary

For every stock, Zacks offers an A-F grade for each of value, growth, and momentum, as well as an overall 1-5 ranking. In addition, you can find detailed analyst reports that explain the rationale behind the grades in more detail and compare the company against its industry peers.

Morningstar offers a similar analysis, complete with detailed analyst reports. However, instead of value, growth, and momentum, Morningstar grades stocks based on their business moat and how efficiently the company uses capital to generate earnings. Morningstar also provides a fair value estimate for each stock and offers price levels at which the stock would be considered a ‘strong buy’ or a ‘strong sell.’

Zacks vs. Morningstar - Morningstar Stock Summary

Overall, Zacks’ stock analysis tends to focus on a 3-6-month timeframe whereas Morningstar’s analysis is longer-term in nature. Morningstar doesn’t consider technical factors at all when rating stocks.

Zacks vs. Morningstar: Top Investment Lists

Both Zacks and Morningstar use their stock ratings to put together lists of recommended investments. At Zacks, all stocks are organized into rank lists – the #1 rank list includes stocks that Zacks analysts rate as a ‘strong buy,’ while the #5 rank list includes stocks that they rate as a ‘strong sell.’ At Morningstar, you’ll find a 5-star stocks list as well as lists for undervalued and wide moat stocks.

Zacks vs. Morningstar - Zacks 1 Rank

Zacks vs. Morningstar: Fund Analysis

Zacks and Morningstar also cover mutual funds and ETFs. At Zacks, each fund is assigned a 1-5 rating as well as a risk score from low to high. You can quickly see a fund’s holdings, historical performance, and fees, but the meat of Zack’s fund analysis comes in the form of lengthy analyst reports.

Morningstar makes its fund analysis more digestible. For every mutual fund and ETF the service covers, you’ll find a star rating, an analyst rating, and ratings for the fund’s management team, asset selection process, and investment motivations. Morningstar also rates funds’ performance, risk, and fees relative to comparable funds. Importantly, Morningstar uses more charts and visualizations than Zacks to present fund data, so it’s not strictly necessary to read the full analyst report to get a sense of whether a particular fund is a worthwhile investment. 

Zacks vs. Morningstar - Morningstar Fund Analysis

Zacks vs. Morningstar: Fund Screeners

Both Zacks and Morningstar curate lists of top fund investments to help you quickly find mutual funds and ETFs to invest in. In addition, the two platforms offer screening tools that allow you to sort through the thousands of funds they rate.

At Zacks, you’ll find more than 50 screening parameters for factors like fund type, performance, fees, and Zacks rank. You can also run in-depth scans based on the characteristics of funds’ holdings, like average EPS growth or P/E ratio of the constituent stocks. Zacks also has over 45 premade screens to help you identify funds that stand out for value, growth, or momentum.

Zacks vs. Morningstar - Zacks Fund Screener

Morningstar’s screeners for mutual funds and ETFs are very similar to what Zacks offers. One key advantage is that you can easily see the star rating of all funds in your results table. Unfortunately, Zacks doesn’t show fund ratings when displaying screen results.

In addition to the screening tools, Zacks and Morningstar both let you compare funds head-to-head. You’re limited to comparing 5 funds at a time with Zacks, while there are no limits on how many funds you can compare with Morningstar.

Zacks vs. Morningstar - Morningstar Fund Compare

Zacks vs. Morningstar: Pricing

Both Zacks and Morningstar provide a lot of content and advice for free, although you’ll need a paid subscription at either site to unlock the screeners and investment lists. Zacks Premium costs $299 per year, compared to $199 per year for Morningstar Premium. Zacks also offers Investor Collection, which includes access to 8 model portfolios, for $495 per year, and Ultimate, which offers real-time stock trading recommendations, for $2,995 per year.

Which Service is Better?

Zacks and Morningstar are both highly regarded companies that provide excellent services to investors. Generally speaking, Zacks is a better choice for medium-term investors who want to focus more on individual stocks than on ETFs and mutual funds. Zacks takes technical momentum and year-over-year earnings growth into account when assigning stock ratings, whereas Morningstar is more focused on how stocks’ price compares to their long-term fair value. In addition, Zacks’ #5 rank list can be used by investors who want to short overvalued stocks.

For long-term investors who want to build a portfolio primarily from mutual funds and ETFs, we think Morningstar is the better platform. While both Morningstar and Zacks offer tools for fund analysis, Morningstar’s metrics are more readily understandable and more directly comparable between funds. In addition, Morningstar’s screeners and fund comparison tools are better suited for comparing funds head-to-head than Zacks’ tools are. 

Alternatives to Zacks and Morningstar

If you’re more interested in individual stock investing than in fund investing, a service like the Motley Fool’s Stock Advisor might make more sense for you than either Zacks or Morningstar. Stock Advisor issues recommendations for 2 specific stock investments each month, so it requires very little research on your part. Recommendations are centered around high-growth stocks with excellent long-term prospects, and positions are intended to be held for at least 2 years and sometimes up to 10 years.

Stock Advisor costs $199 per year ($99 for the first year), so it’s comparable in price to a Morningstar Premium subscription.

Conclusion

Zacks Investment Research and Morningstar are among the most widely respected stock research firms in the US. Both platforms offer excellent services for stock and fund investors. We think Zacks is best for medium-term investors who lean more heavily towards buying individual stocks, while Morningstar is best for long-term investors who want to focus on mutual funds and ETFs.