Here's Why Investors Should Retain FactSet Research (FDS)
FactSet Research Systems, Inc’s. FDS strategic acquisitions expand its offerings and reinforce its global financial database status. Share buybacks and dividends enhance investor confidence and earnings per share.
FDS has an impressive Growth Score of B. This style score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth.
Earnings for 2023 and 2024 are expected to rise 12.2% and 9.3%, respectively. The earnings estimates have been revised 1.4% and 1.2% north in the past 90 days. The company has an impressive earnings surprise history with earnings surpassing the estimates in three of the past four quarters and missing on one instance. The company has a positive earnings surprise of 4%.
FactSet Research Systems Inc. Price and Consensus
FactSet Research Systems Inc. price-consensus-chart | FactSet Research Systems Inc. Quote
FactSet Research Systems, Inc. reported impressive third-quarter fiscal 2023 (ended May 31) results, wherein both earnings and revenues beat the respective Zacks Consensus Estimate.
Non-GAAP earnings per share (excluding 33 cents from non-recurring items) of $3.79 beat the consensus mark by 4.7% and grew slightly from the year-ago quarter’s reported figure. Revenues of $529.8 million surpassed the consensus estimate by a slight margin but increased 8.4% from the year-ago quarter’s reported figure. The increase can be correlated to improved performance from Analytics & Trading and Content & Technology solutions.
Factors in Favor
FactSet offers extensive data and analysis across a diverse array of asset classes, regions, and markets, catering to the needs of investment professionals overseeing varied and globally distributed portfolios. This comprehensive global reach holds particular significance for these professionals.
FactSet has strategically acquired companies to drive growth. In March 2022, it completed the $1.925 billion CUSIP Global Services (CGS) acquisition from S&P Global, enhancing its global capital market position. Notable acquisitions like BISAM, IDMS, Portware LLC, and others expand its product range, foster innovation and establish it as a global financial database leader.
FactSet acquired idaciti, Inc. in 2023 to support its ongoing initiative to digitally revamp its content collection infrastructure, while also expediting the availability of essential data sets that underpin advanced future workflows.
FactSet's shareholder-centric strategy shines through its ongoing share repurchases and dividend payments. In fiscal 2022, $18.64 million worth of shares were reclaimed, accompanied by $125.9 million disbursed in dividends. In fiscal 2021, shares valued at $264.7 million were repurchased, with dividends reaching $117.9 million. Fiscal 2020 showcased $199.6 million in share repurchases and $110.4 million in dividends.
Some Risks
Factset’s current ratio at the end of third-quarter fiscal 2023 was pegged at 2.11, lower than the current ratio of 2.12 reported at the end of the prior-year quarter. Declining current ratio indicates that the company may have problems meeting its short-term obligations.
The growing reliance of the company on international markets is evident, with 40-41% of revenues generated from international operations in the last three fiscal years. This exposes the company to foreign currency fluctuation risks.
Zacks Rank and Stocks to Consider
FDS currently carries a Zacks Rank #3 (Hold).
Investors interested in Zacks Business Services sector can consider the following stocks:
ICF International ICFI holds a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings for 2023 are expected to grow 8.8% while revenues are anticipated go up 10.8% year over year. ICFI has an impressive earnings surprise of 6.95% in the past four quarters, having beaten the Zacks Consensus Estimate in all four trailing quarters.
CRA International CRAI carries a Zacks Rank of 2. Earnings for 2023 are expected to go down 7.9% while revenues are expected to grow 6.7% from the year-ago reported figures. CRAI has a decent earnings surprise of 5.13% in the past four quarters, having beaten the Zacks Consensus Estimate in two of the four trailing quarters and missing on two instances.
Aptiv APTV holds a Zacks Rank of 2. Earnings for 2023 are expected to grow 37% while revenues are anticipated to gain 13.9% from the year-ago figure. APTV has an impressive earnings surprise of 13.35% in the past four quarters, having beaten the Zacks Consensus Estimate in all four trailing quarters.
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