Stock (Symbol)

Factset Research (FDS)

Stock Price

$154

Sector

Financial

Data is as of

April 16, 2016

Expected to Report

Jun 14 – 20

Company Description

FDS 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

Factset Research (FDS) provides financial data and analytics to hedge funds, investment managers, investment bankers, wealth managers and private equity firms. Data delivered includes company data, market data, news and research. Factset was founded in 1978, went public in 1996 and has grown profits every year since. The company grows profits consistently in the double-digits, pays a dividend of 1% and buys back stock. Finance guys depend on Factset to do their research and due diligence, and Factset can increase subscription prices around 10% each year. I would get Factset Research if I could afford it. The stock also has a good safety rating. FDS is a solid investment, and investors know this (cuz they use the software). The company is has an estimated long-term growth rate of 11% and if you tack on the dividend that’s an estimated 12% total annual return. Unfortunately, the stock sells for 24x earnings — double its growth rate. But you’re paying for quality. For certainty and consistency. I will add FDS to the Conservative Growth Portfolio today.

One Year Chart

Last qtr FDS put out some impressive returns, but some research firms frowned on the stock saying it was too high. This stock is always expensive. The company delivered 14% profit growth last qtr on 14% gain in sales, and beat the street estimate of $1.52 by 7 cents. Analysts upped earnings estimates across the board when 2016’s figure rising from $6.15 to $6.33 and 2017’s from $6.92 to $7.08. Profit growth Estimates for the next 4 qtrs are 13%, 13%, 18% and 11%.

Fair Value

You can clearly see in this Profit History Table that the stock usually earns a P/E in the mid-20s. I personally love the fact profits have grown every year — including the Bear Market of 2007-2009. My figures show the company has grown its dividend each year since 2010, but other sources have different takes (I use the year the dividend was pain in as the date). FDS is selling close to its Fair Value right now, but the company has an August fiscal year end and I will be valuing the company on 2017 estimates next qtr.

Bottom Line

Factset has an excellent business that’s delivered double-digit profit growth for years. The stock has above average safety with a subscription based software model — which I love. Management also pays a dividend, buys back stock. I think this stock is solid, and will add it to the Conservative Growth Portfolio where it will rank 12th of 35 stocks in the Power Rankings.