FactSet (FDS) Hits a New 52-Week High on Solid Q2 Earnings - Analyst Blog
Shares of FactSet Research Systems Inc. FDS hit a new 52-week high of $159.55 on Mar 18. The stock eventually closed at $157.58, representing a one-year return of 52.5% and a year-to-date return of 12.2%. The average trading volume for the last three months aggregated approximately 278K shares.
The company’s current momentum is mainly attributable to the strong second-quarter fiscal 2015 results reported recently and an optimistic guidance for the third quarter. FactSet’s second-quarter revenues of $247.8 million not only increased 9.2% from the year-ago quarter but were also ahead of the Zacks Consensus Estimate of $246 million. Reported revenues were toward the higher end of management’s guided range of $244 to $248 million.
Better-than-expected growth across products and geographic regions boosted revenues. Moreover, the company has a high client retention ratio, which is a positive. Also, Annual Subscription Value (ASV) increased year over year and the company added a good number of clients.
Driven by higher revenues, the company’s adjusted earnings jumped nearly 14% year over year to $1.39 per share. However, it fell short of the Zacks Consensus Estimate by a couple of cent.
FactSet also provided an encouraging guidance for the forthcoming quarter. For the third quarter of fiscal 2015, FactSet expects revenues in the range of $251 to $256 million (mid-point $253.5 million). The Zacks Consensus Estimate is pegged at $251 million. Earnings per share are expected between $1.40 and $1.42 (mid-point $1.41), while the Zacks Consensus Estimate stands at $1.41.
FactSet continues to upgrade products and applications across its segments, with special emphasis on financial services, to gain more customers. Moreover, the company’s acquisition of Revere Data, Matrix Data and Code Red will help it to deliver innovative products and evolve as a global financial database company. It will also help FactSet to maximize value for its partners and provide exclusive content sets.
Nonetheless, competition from Bloomberg L.P., Dow Jones & Company Inc., MSCI Inc. MSCI and Thomson Reuters, which are coming up with substitute products at competitive prices, is a headwind for the company.
FactSet carries a Zacks Rank #2 (Buy). A couple of stocks in the Business Information Services space that are worth considering are Morningstar Inc. MORN and The ADT Corporation ADT, carrying the same Zacks Rank as FactSet.
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