FactSet Research Systems Inc. Just Recorded A 18% EPS Beat: Here's What Analysts Are Forecasting Next
Investors in FactSet Research Systems Inc. (NYSE:FDS) had a good week, as its shares rose 8.2% to close at US$329 following the release of its quarterly results. Revenues were US$374m, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$2.63 were also better than expected, beating analyst predictions by 18%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
View our latest analysis for FactSet Research Systems
Taking into account the latest results, the most recent consensus for FactSet Research Systems from 15 analysts is for revenues of US$1.55b in 2021 which, if met, would be a credible 5.3% increase on its sales over the past 12 months. Statutory earnings per share are predicted to rise 2.0% to US$10.09. In the lead-up to this report, the analysts had been modelling revenues of US$1.55b and earnings per share (EPS) of US$9.68 in 2021. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target rose 12% to US$282, suggesting that higher earnings estimates flow through to the stock's valuation as well. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on FactSet Research Systems, with the most bullish analyst valuing it at US$330 and the most bearish at US$215 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that FactSet Research Systems' revenue growth is expected to slow, with forecast 5.3% increase next year well below the historical 8.3%p.a. growth over the last five years. Compare this to the 275 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 4.4% per year. So it's pretty clear that, while FactSet Research Systems' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards FactSet Research Systems following these results. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple FactSet Research Systems analysts - going out to 2023, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 2 warning signs for FactSet Research Systems that you need to be mindful of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.
