Stock (Symbol) |
Factset Research (FDS) |
Stock Price |
$162 |
Sector |
| Financial |
Data is as of |
| July 18, 2017 |
Expected to Report |
| Sept 25 |
Company Description |
 FDS is a provider of integrated financial information and analytical applications to the global investment community. 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 |
 Passive investing is all the age right now. Why pay a money manager 2% or so when you can invest in an S&P 500 Index fund or a hot-sector ETF and pay less than 0.5%? And those index funds/ETFs are already set up — no management needed, no research needed. The stocks stay consistent (for the most part). Thus, there’s not a need to invest in Factset Research (FDS), a company that provides financial data and analytics to hedge funds, investment managers, investment bankers, wealth managers and private equity firms. But Passive vs. Active investing isn’t something new, and studies show the pendulum swings back and forth in regards to what’s better. In my professional opinion, active investing is about to take charge, and money managers will have their day in the sun. Thus, FDS will have a better environment to grow. In fact, Factset Research has had it good for close to 40 years. FDS 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. This stock is down in an up market, perhaps because the average subscription value rose only 6% last qtr. Good. That gives investors a chance to get in at a discount. The average median P/E the past ten years is 24 and the current P/E is 20. Factset is a safe stock with an Est. LTG of 11% and a dividend of 1% Management buys back stock and makes acquisitions that boost profits. This is a solid organization. This year FDS is expected to grow profits 14% for the 3rd consecutive year. This kind of quality deserves a premium price. My Fair Value is 24x earnings, or $192 per share — 19% higher than the recent quote. This is one of the only values left in today’s market. |
One Year Chart |
 Solid profit growth across the board. But qtrly Estimates did decrease a penny each. That’s nothing as FDS is expected to earn an average of $1.94 the next 3 qtrs. Now analysts expect 12%, 11%, 9% and 9% profit growth the next 4 qtrs. This chart looks good, with the stock hitting support here. |
Fair Value |
 Since 2014 this stock has consistently traded for 25 to 28 times earnings. Right now the P/E is 22 when using 2017 profit estimates, but FDS has a fiscal year-end Aug 31st, so I’m now looking ahead to 2018. If the company makes $8.01 and earns a 24 P/E the stock will be $192 in a year, a potential gain of 20% including dividends. |
Bottom Line |
 Factset is one of the world’s finest companies. It’s software is needed by investment managers to make decisions, and these managers pony up to subscribe each year (in addition to price increases). FDS is a safe stock, pays a dividend, and management buys back stocks in addition to making acquisitions. Plus the stock is on sale right now. Passive investing is the rage now, but I expect that to change in a matter of months. FDS ranks 5th of 31 stocks in the Conservative Growth Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio 5 of 31 |
