Robinhood Markets Reports Earnings on Oct. 27. Is It a Better Buy Than Morningstar?

Choosing between a high-growth disruptor and an established data powerhouse requires weighing rapid innovation against steady, diversified performance. Investors today are looking at Robinhood Markets (NASDAQ:HOOD) and Morningstar (NASDAQ:MORN) as potential winners.

Robinhood primarily targets the retail segment with mobile-first trading and expanding crypto offerings. Morningstar serves a broad spectrum of institutional and retail clients with its gold-standard research and data platforms. This comparison examines their growth, financial health, and risks to help you decide which stock fits your 2026 goals.

The case for Robinhood Markets

Robinhood Markets sells online investing and trading services to a growing base of nearly 28.5 million funded customers. It primarily targets retail investors, but the firm is increasingly competing for space among fintech stocks by expanding into institutional services. Through its acquisition of Bitstamp, it now offers cryptocurrency services like lending and settlement, including support for Bitcoin. Additionally, Robinhood has a joint venture with SIG to operate an institutional-grade futures exchange.

In FY 2025, revenue reached nearly $4.5 billion, representing growth of close to 51.6% over the prior year. This resulted in net income of approximately $1.9 billion for the fiscal year. The net margin for the year reached approximately 42.1%, though this was a slight decline from the 47.8% net margin reported in FY 2024. The strong revenue growth highlights the success of its expanding product lineup and increased trading activity.

As of its December 2025 balance sheet, Robinhood reported a debt-to-equity ratio of nearly 1.3x. This metric measures total debt relative to shareholder equity, indicating the company uses a moderate amount of leverage. Its current ratio, which measures the ability to cover short-term debts with short-term assets, is approximately 1.3x. Free cash flow, calculated as cash flow from operations minus capital expenditures, was roughly $1.6 billion in FY 2025.

The case for Morningstar

Morningstar serves a wide variety of clients, including financial advisors, asset managers, and individual investors. It provides data and research platforms like PitchBook, which offers insights into private capital markets. The company also provides investment management services and credit ratings for corporate and sovereign instruments. As of late 2025, its assets under management and advisement were approximately $378 billion.

In FY 2025, the firm reported revenue of roughly $2.4 billion, reflecting growth of approximately 7.5% compared to FY 2024. Net income for the period was nearly $374.2 million. The net margin was roughly 15.3%, which is similar to the 16.3% net margin from the previous fiscal year. This stability reflects a diversified business model that relies on recurring subscriptions and asset-based fees rather than just trading volume.

As of its December 2025 balance sheet, Morningstar reported a debt-to-equity ratio of approximately 1.2x. This figure measures total debt against shareholder equity. The current ratio, which compares short-term assets to short-term liabilities, is roughly 1.0x. Free cash flow was nearly $442.6 million for the fiscal year, representing cash generated from operations after accounting for capital expenditures.

Risk profile comparison

Robinhood faces significant regulatory and litigation risks, particularly regarding its payment for order flow practices and its new prediction markets platform. Lawsuits have already alleged that some of its event contracts constitute illegal gambling, which could lead to significant costs. The company also depends on third-party providers like Amazon for cloud infrastructure. Technical failures or cybersecurity breaches could cause lasting reputational harm and impact its transaction-based revenue.

Morningstar faces risks regarding its independence and reputation. If investors perceive conflicts of interest in its credit ratings or research, its credibility could suffer significantly. The firm also faces technological pressure, particularly from the rise of artificial intelligence. Failure to adapt or errors in AI systems could lead to a loss of competitive advantage. Furthermore, its revenue is sensitive to market volatility, which affects asset-based fees and client spending on research products.

Valuation comparison

Robinhood trades at a significantly higher premium than Morningstar, reflecting its much faster revenue growth and recent expansion into new institutional markets.

Valuation metrics include sourcing from Financial Modeling Prep (FMP) and may differ from other data providers.

Which stock would I buy in 2026?

Morningstar is an established but slow-growing financial data provider and investment manager. Its revenue has grown 22% since the beginning of 2024, and its stock price is down nearly 27% on a total return basis in that time. It pays a dividend that currently yields just under 1%, and it's actively repurchasing shares -- buying $400 million worth of its own stock year to date as of June 30. That improves shareholder value and may indicate that management believes its stock is undervalued. Income investors may be interested in its dividend, and risk-averse investors will likely appreciate its stability, though there may be other established financial giants that offer the same, if not better results.

Robinhood is just about everything Morningstar isn't. It offers online investing and trading services and is branching out into crypto and futures trading, and it makes money from users trading frequently on its platform. Its quarterly revenue has grown about 185% since the beginning of 2024 -- but it hasn't been a straight line higher. Nor has its stock price, which has gained 757% in that time frame. Robinhood doesn't pay a dividend, but it did approve a $1.5 billion share repurchase program in March 2026 that it plans to execute over the next three years.

Morningstar's biggest risks include falling behind in the adoption of technology and AI, as well as the variety of financial services that today's customers are looking for. Robinhood risks being so far ahead of the curve that it remains stuck in murky regulatory waters, which could prove costly for both the company and its investors. But if you have a long investing horizon and are willing to take on the risk, Robinhood could deliver stronger share price gains than Morningstar from here.

Investors should pay attention to Robinhood's revenue streams. Transaction-based revenue, its largest segment, increased 44% in Q2 2026, primarily driven by event contracts revenue, which increased more than tenfold. But cryptocurrency revenue declined 38%. Growth in revenue from interest-earning assets, Trump account services, and Robinhood Gold subscriptions could indicate more predictable and stable recurring revenue streams from here, which could mitigate some risk.

Sarah Sidlow has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Bitcoin. The Motley Fool recommends Robinhood Markets. The Motley Fool has a disclosure policy.