Here's Why You Should Add FactSet Stock to Your Portfolio
FactSet Research Systems Inc. FDS is a business-information services company that has performed extremely well year to date and has 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.
Let’s take a look at the factors that make the stock an attractive pick.
Share Price Performance: A glimpse of the company’s price trend reveals that the stock has had an impressive run on the bourse year to date. FactSet has rallied 30.4% compared with the industry’s 16.3% rally.
Solid Rank: FactSet has a Zacks Rank #2 (Buy). Our research shows that stocks with a Zacks Rank #1 (Strong Buy) or #2 offer attractive investment opportunities for investors. Thus, the company is a compelling investment proposition at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here.
Northward Estimate Revisions: Nine estimates for fiscal 2020 moved north over the past 60 days versus no southward revision, reflecting analysts’ confidence in the company. Over the same period, the Zacks Consensus Estimate for fiscal 2020 climbed 5.2%.
Positive Earnings Surprise History: FactSet has an impressive earnings surprise history. The company outpaced the consensus mark in each of the trailing four quarters, delivering an average beat of 8.2%.
Solid Prospects: The Zacks Consensus Estimate for fiscal 2020 earnings is pegged at $10.52, reflecting year-over-year growth of 5.2%. Moreover, earnings are expected to register 3.4% growth in fiscal 2020. The stock has a long-term expected earnings growth rate of 8.5%.
Growth Factors: FactSet is benefiting from strength in analytics, content and technology solutions, and wealth management solutions. The company’s revenues increased 2.6% year over year in the third quarter of fiscal 2020. The company added 55 clients in the quarter, taking the total number to 5,743. Client retention rate at the end of the quarter was 89%.
Although many companies across diverse sectors have suspended dividend payouts amid the coronavirus crisis, Factset is one of those few companies that are staying afloat amid the economic crisis and hiking dividends as well.
On May 5, the company announced the approval of a 7% hike, raising the quarterly cash dividend from 72 cents per share to 77 cents per share. This marks the fifteenth consecutive year of dividend hike. FactSet has a track record of consistent dividend payment. It paid $100.1 million, $89.4 million and $80.9 million in dividends in fiscal 2019, 2018 and 2017, respectively.
Other Stocks to Consider
Some other top-ranked stocks in the broader Zacks Business Services sector are SailPoint Technologies SAIL, Pluralsight PS and Fiserv FISV, each carring a Zacks Rank #2 (Buy).
The long-term expected earnings per share (three to five years) growth rate for SailPoint, Pluralsight, Inc. (PS) and Fiserv are 31.2%, 21.1% and 12.9 respectively.
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