BOJA vs. SBUX: Which Stock Should Value Investors Buy Now?
A wise investment decision involves buying well-performing stocks at the right time while selling those that are at risk. A rise in share price and strong fundamentals signal a stock’s bullish run.
FactSet Research Systems Inc. FDS, a business - information services company, performed well over the past year and has the potential to carry the momentum forward. Therefore, if you have not taken advantage of the share price appreciation yet, it’s time you add the stock to your portfolio.
What Makes FactSet an Attractive Pick?
An Outperformer: The company has outperformed the S&P 500 on a year-to-date basis. The stock has returned 5.8% compared with 2.3% increase recorded by the S&P 500.
Solid Zacks Rank: FactSet currently carries a Zacks Rank #2 (Buy). Our research shows that stocks with a Zacks Rank #1 (Strong Buy) or 2 offer the attractive investment opportunities for investors. You can see the complete list of today’s Zacks #1 Rank stocks here.
Positive Earnings Surprise History: FactSet has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in the trailing four quarters, delivering an average positive surprise of 1.9%.
Strong Growth Prospects: The Zacks Consensus Estimate for fiscal 2018 earnings is pegged at $8.48, reflecting year-over-year growth of 16%. Moreover, earnings are expected to register 11.9% growth in fiscal 2019. The company has some expected long-term earnings per share growth rate of 11.3%.
Growth Drivers: FactSet is witnessing growth in its Annual Subscription Value (ASV), driven by new client additions. Evidently, in second-quarter fiscal 2018, the company added 86 new clients, taking the total count to 4,895. As of Feb 28, 2018, its ASV increased 13.4% and reached $1.35 billion. In the quarters ahead, we expect FactSet’s proprietary content revenues to gain momentum owing to stronger demand stemming from its competitive pricing strategy. We believe that its growing customer base, coupled with high client retention rate (89%) and a competitive pricing strategy, will positively impact results over the long term.
FactSet Research Systems Inc. Revenue (TTM)
FactSet Research Systems Inc. Revenue (TTM) | FactSet Research Systems Inc. Quote
FactSet is one of the leading providers of online integrated data-related products and services for the investment community. According to technavio, the Global Business Information market is expected to grow at a CAGR of 5.2% from 2017 to 2021. Being one of the key data providers, FactSet is expected to gain a competitive edge through its technological know-how and increasing share in new markets.
Also, the company has made several acquisitions to expedite growth over the years. Some of the notable acquisitions include BISAM, IDMS, Portware LLC, Code Red, Revere Data LLC, StreetAccount among others. These buyouts are aimed at helping FactSet to deliver innovative products and evolve as a global financial database company. Also, the company will be able to maximize value for its partners and provide customers with exclusive content sets backed by these transactions. Of late, FactSet completed the acquisitions of BISAM and IDMS, which in turn, have expanded the company’s international footprint, particularly in Europe. These latest buyouts have also increased international ASV contribution toward the company’s total ASV to 37.3% in fiscal 2017 from 34.4% in fiscal 2016.
FactSet has a consistent record of returning value to shareholders in the form of dividend and share repurchases. In fiscal 2017, it returned $261 million through share repurchases and paid $80.9 million as dividend. Continuing the same strategy, the company repurchased approximately $114 million worth of its common stock and paid dividend of $43.4 million during first-half of fiscal 2018. These shareholder-friendly initiatives not only instill investors’ confidence in the stock but also positively impact earnings per share.
Other Stocks to Consider
Some other top-ranked stocks in the broader Business Services sector include Automatic Data Processing ADP, The Dun & Bradstreet Corporation DNB and TransUnion TRU. All the stocks carry a Zacks Rank #2.
The long-term expected earnings per share growth rate for Automatic Data Processing, Dun & Bradstreet and TransUnion is 11%, 4.5% and 10%, respectively.
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