The SIC code is part of a classification system determined by the U.S. Executive Office of Management and Budget (EOMB). Prior to July 1999, Morningstar used the SIC Codes to classify the industry to which each stock belonged. We now use a Morningstar-specific classification system to determine a stock’s industry.
Benefit
This field provides an easy way to search for stocks within a certain area of business. When making comparisons among stocks, it can be helpful to compare companies within the same area of business.
Origin
After information is gathered from the description-of-business section of the company’s 10-K form, the company is coded using the Standard Industrial Classification manual published by the U.S. Office of Management and Budget.
For the Pros
The EOMB updates the classification system every 10 years. The last system code revision was scheduled for January 1998.