Stock (Symbol)

Factset Research (FDS)

Stock Price

$170

Sector

Financial

Data is as of

July 25, 2016

Expected to Report

Sept 20 – 26

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) continues down the slow and steady road. Factset 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 and has grown profits every year since it went public in 1996 The company pays a dividend of 1%, buys back stock, and usually grows profits in the double-digits. 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. Factset is one of these great franchises most investors are unaware of. The company has grown profits 14% per year the past decade and the stock’s also risen 14% a year during that time. The only negative is investors have to pay up for the stock, which usually has a P/E in the mid-20s. 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

Profits rose 15% last qtr on 13% more revenue. Analysts had predicted 13% profit growth, and FDS beat the street by a bit. The stock has been hot recently, but might find resistance at $177 which is (1) the one-year high and (2) my 2016 Fair Value. Profit growth Estimates for the next 4 qtrs are 14%, 19%, 10% and 10% and these increased a bit from last qtr. Annual Profit Estimates remained relatively unchanged.

Fair Value

I’m surprised FDS didn’t have a profit decline during the Bear Market of 2008-2009. I’m sure some funds went out of business. That’s a positive factor as we look ahead, as that means the company has a high level of certainty during recessions. My Fair Value on this stock is 25x earnings, and with FDS ending its fiscal year on August 31st, I’m already looking ahead to 2017.

Bottom Line

Factset has an excellent business that’s delivered profit growth every year it’s been a public company — 20 years to be exact. The stock has above average safety, pays a 1% yield , and has an Est LTG of 11% per year. It looks like this stock will continue down the slow and steady path. FDS ranks 13th of 38 stocks in the Conservative Growth Portfolio Power Rankings.