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Factset Delivers the Data Investment People Count On

Stock (Symbol)

Factset Research (FDS)

Stock Price

$157

Sector
Financial
Data is as of
October 10, 2016
Expected to Report
Dec 13 – 19
Company Description
factset_logoFDS is a provider of integrated financial information and analytical applications to the global investment community. FDS operates through three segments based on geographic business activities: the U.S., Europe and Asia Pacific. Sales, consulting, data collection, product development and software engineering are the primary functional groups within the U.S., Europe and Asia Pacific segments that provide global financial and economic information to investment managers, investment banks and other financial services professionals. The U.S. segment services finance professionals, including financial institutions throughout the Americas, while the European and Asia Pacific segments service investment professionals located throughout Europe and the Asia Pacific region, respectively. FDS combines content regarding companies and securities from markets all over the globe into a single online platform of information and analytics. Source: Thomson Financial
Sharek’s Take
David SharekFactset Research (FDS) provides financial data and analytics to hedge funds, investment managers, investment bankers, wealth managers and private equity firms. The  data includs company data, market data, news and research.  Factset provides its software on a subscription basis, which gives it a steady stream of revenues each quarter. Mutual funds and hedge funds depend on Factset to do their research and due diligence, thus the company can pass along small fee increases (say 10%) each year. Last qtr FDS had 10% sales growth, increased its Annual Subscription Value by 9%, and turned that into 14% profit growth. Factset was founded in 1978 and has grown profits every year since it went public in 1996.The company pays a dividend of 1%, buys back stock, makes acquisitions, and usually grows profits in the double-digits. Factset Research is one of these great franchises most investors are unaware of. This is a solid buy-and-hold investment for investors who are looking for double-digit growth with a good degree of security.
One Year Chart
fds_2016_q3FDS stock fell after it reported profits as it lowered forward-looking estimates just a bit. Honestly, the company just ended its fiscal year and its common practice for management to start a new year by lowering the bar on the year ahead. The overall impact wasn’t bad — 2017 estimates fell from $7.08 to $7.04 and qtrly estimates dropped by 2 cents in each of the next 3 qtrs. Now qtrly profit Estimates are 18%, 9%, 9% and 8%.
Fair Value
fds_2016_q3_phMy Fair Value on this stock is 25 times earnings, which equates to $176 — around where the stock was before if fell after earnings. Now FDS has a year to get back to that level. I love how the company didn’t have off years during the 2008-2009 recession which hurt almost every money manager.
Bottom Line
fds_2016_q3_10yrFactset offers a financial software that investment managers depend on. The company has delivered profit growth every year it’s been a public company, including 13% profit growth the past ten years which resulted in 12% annual stock growth. Factset has above average safety, pays a 1% yield, buys back stock, and has an Est LTG of 10% per year. I feel the stock will continue to do what it’s been doing and this is a good buy point as it is on a dip in price. FDS ranks 16th of 34 stocks in the Conservative Growth Portfolio  Power Rankings.
Power Rankings
Growth Stock Portfolio

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Aggressive Growth Portfolio

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Conservative Stock Portfolio

16 of 34

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