Stock (Symbol)

Factset Research (FDS)

Stock Price

$158

Sector

Financial

Data is as of

April 13, 2017

Expected to Report

Jun 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) provides financial data and analytics to hedge funds, investment managers, investment bankers, wealth managers and private equity firms. Factset was founded in 1978 and has grown profits every year since it went public in 1996. Data it provides includes company data, market data, news and research. The company sells its software on a subscription basis, which gives it a steady stream of revenues each quarter. Mutual funds and hedge funds depend on Factset when doing their research and due diligence, thus the company can pass along small fee increases each year (say 8-9%). FDS gets around $750 million in revenue from the U.S. and $100 million Internationally. Factset fell last qtr. The reason is unclear, the only thing I can blame it on is the company beat the street by 5 cents 2QtrsAgo and the 1 cent beat LastQtr wasn’t as good. Or it could be that its Annual Selling value was just 7%, down 1% from a qtr earlier. I think FDS is fine, and it’s a good buy here. Factset is a safe stock that has an Est. LTG of 11%, pays a dividend of 1%, buys back stock, and makes acquisitions that boost profits. Profit growth has averaged 13% a year the past decade — with record profits every year. In 2017, FDS is expected to grow profits 14% for the 3rd consecutive year. This kind of quality deserves a premium price. My Fair Value is 25x earnings, or $182 per share — 15% higher than the recent quote. Still, I wouldn’t sell at $182 as this stock has been a perennial winner.

One Year Chart

This is silly. The stock drop I mean. Maybe 22% growth 2QtrsAgo impressed growth investors who strive for 20% growers, then these people sold after 14% was delivered? Or was it because 2017 profit estimates jumped from 23 cents after my last report and this time grew just a penny? FDS is a 13-14% grower. You should know that. Estimates are for 12%, 12%, 11% and 10% profit growth the next 4 qtrs. These increased slightly.

Fair Value

Since 2014 this stock has consistently traded for 25 to 28 times earnings. My Fair Value is 25 times, which is really not asking much. Still, there’s solid upside from these levels. FDS is a great stock at a good price..

Bottom Line

Factset is a great stock at a good price. It has provided investors with long-term growth in the double digits and provides a great service to money managers who continue to renew their contracts annually — at higher rates. With equity markets strong, FDS has wind at its sails. This is a solid investment for conservative investors. FDS ranks 5th of 33 stocks in the Conservative Growth Portfolio Power Rankings.