Morningstar vs. Nu: Which Financial Stock Is a Better Buy for 2027?

Choosing between an established research leader and a high-growth digital disruptor requires a careful look at business models. Morningstar (NASDAQ:MORN) and Nu (NYSE:NU) represent two different ways to invest in financial services.

Morningstar provides the data and insights that power investment decisions for millions of professionals and individuals. Nu is a digital-first banking platform that has rapidly gained market share across Brazil, Mexico, and Colombia. Both companies are leaders in their respective fields, but they face very different growth and risk outlooks.

The case for Morningstar

Morningstar offers a broad suite of independent research, data, and investment management services. According to its latest annual report, filed for the 2025 period, the company serves eight primary customer groups, including financial advisors, asset managers, and institutional owners. Because its largest customer accounts for less than 3% of revenue, the company avoids significant customer concentration risk while employing nearly 11,000 people globally.

In FY 2025, revenue reached nearly $2.4 billion, representing growth of roughly 7.5% compared to the prior year. The company generated net income of close to $374.2 million during this period, resulting in a net margin of approximately 15.3%. This performance demonstrates steady growth in its recurring revenue streams from data and research subscriptions.

As of its December 2025 balance sheet, the debt-to-equity ratio is approximately 1.2x, which measures total debt relative to shareholder equity. The current ratio is roughly 1.0x, which compares current assets to current liabilities to assess short-term liquidity. Free cash flow for FY 2025 reached nearly $442.6 million, calculated as cash from operations minus capital expenditures.

The case for Nu

Nu operates as a digital financial services platform and has become a major force among fintech stocks in Latin America. It served 131 million customers as of December 2025, reaching a significant portion of the adult populations in Brazil and Mexico. The platform is currently the largest private financial institution in Brazil by customer count and continues to scale rapidly in Colombia.

For FY 2025, the company reported revenue of approximately $16.3 billion, a substantial increase of roughly 45% over the previous year. Net income reached nearly $2.9 billion, representing a net margin of around 18.1%. This rapid growth is driven by increasing customer engagement and the expansion of its product offerings in core markets.

According to its December 2025 balance sheet, Nu maintains a debt-to-equity ratio of approximately 0.5x, which reflects the use of total debt compared to its equity base. The current ratio stands at roughly 0.6x, measuring short-term assets against liabilities. Free cash flow for FY 2025 was nearly $3.5 billion, representing cash from operations minus capital expenditures.

Risk profile comparison

Morningstar depends heavily on its brand reputation and the perceived independence of its research and credit ratings. Any perceived conflict of interest, such as those related to the issuer-pay model, could significantly harm the business. The company also faces competition from MSCI (NYSE:MSCI), S&P Global (NYSE:SPGI), and Moody's (NYSE:MCO) while navigating complex global regulations.

Nu faces risks related to macroeconomic volatility in Latin America, where interest rate fluctuations can impact loan performance and credit quality. The company competes with large, established traditional banks that have significant resources and local market presence in Brazil and Mexico. As a digital platform, it must also manage evolving regulations and potential cyber threats in its primary operating regions.

Valuation comparison

Nu currently trades at a more attractive forward P/E multiple than Morningstar, based on future earnings estimates, despite its faster revenue growth.

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

The Forward P/E ratio measures the stock price against the company's predicted earnings for the next twelve months. The P/B ratio compares the stock price with the company's book value, which is the value of its assets minus its liabilities, or roughly what shareholders would own on paper. Investors often lean on this metric for banks because their assets and liabilities are primarily financial instruments. A lower P/B ratio means the stock costs less relative to its underlying book value. The P/S ratio compares the stock price to sales over the past 12 months.

Which stock would I buy for 2027?

Investors looking for a reliable compounder will likely be drawn to Morningstar, which generates revenue from subscriptions, institutional data feeds, and wealth management software platforms. Its product range means it's less exposed to direct credit risk than traditional lenders, and it pays a very modest dividend. The stock is up more than 14% over the last year, with a spike in October driven by several factors. It's reporting strong AI adoption metrics among various products, and early in the month, OpenAI launched ChatGPT for Financial Services, which incorporates private market data from Morningstar's PitchBook unit. In its third-quarter report on Oct. 28, it reported solid growth in revenue, operating income, and profit margins.

Nu stock is down 22% over the last year due to a number of factors, including political shocks in Brazil, regulatory tightening, and credit and margin pressures. It's a good reminder of the risks that come with investing in an international fintech start-up, but I don't think it breaks the investment thesis for Nu. Nu is a fintech disruptor that continues to grow rapidly. In September, the company announced the start of operations in the United States with a full suite of financial products. That international expansion will bring additional regulatory hurdles, and owning Nu means betting on the company's low-cost, app-forward model can continue driving adoption at scale. But for risk-tolerant investors looking for high growth potential in the financial space, Nu's recent pullback leaves it attractively valued.

Sarah Sidlow has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends MSCI, Moody's, Nu Holdings, and S&P Global. The Motley Fool has a disclosure policy.