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These High-Quality Stocks Are Misunderstood

The market was unimpressed with the results of these wide-moat companies during earnings season, but we think their positive long-term stories remain intact.

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Earnings season is in its final inning--and the game hasn't been pretty. Factset's latest report estimates that fourth-quarter earnings declined 3.3% year over year, while revenue fell 3.9%. In addition, earnings and revenue growth aren't expected to revive until 2016's third quarter.

At Morningstar, we don't give quarterly earnings reports and short-term guidance too much weight. Rather, we focus on a company's long-term sustainable competitive advantages, encapsulated in our economic moat ratings. We expect wide-moat companies to deliver superior returns over time. Of course, a company might release information when reporting earnings that will lead an analyst to change his or her moat rating or fair value estimate of the company. But more often than not, short-term earnings disappointments are no more than blips in the long-term picture.

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Susan Dziubinski does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.