Stock (Symbol) |
Factset Research (FDS) |
Stock Price |
$412 |
Sector |
Financial |
Data is as of |
April 12, 2023 |
Expected to Report |
June 21 |
Company Description |
![]() The Company delivers information through its four workflow solutions of Research, Analytics and Trading, Content and Technology Solutions (CTS) and Wealth. It serves a range of financial professionals, which includes portfolio managers, investment research professionals, investment bankers, risk and performance analysts, wealth advisors, and corporate clients. The Company provides both insights on global market trends and intelligence on companies and industries, as well as capabilities to monitor portfolio risk and performance and execute trades. It also offers subscription to products and services such as workstations, portfolio analytics, enterprise data and research management. Source: Refinitiv |
Sharek’s Take |
![]() Factset Research provides market intelligence on securities, companies, and industries that equips clients with the right research investment tools and ideas so they can personally analyze, monitor, and manage their portfolios. Buy-side clients include portfolio managers, analysts, traders and wealth managers. Sell-side clients include firms that perform mergers and acquisitions, advisory work, capital markets services, and equity research. The big statistics analysts look at when evaluating FDS is the Annual Subscription Value (ASV) of contracts clients sign. During the past 8 qtrs, ASV has been: 5.8%,7.2%, 9.2%, 9.4%, 10.1%, 9.3%, 8.8%, and now 9.1%. ASV was strong last quarter because of increased sales of Content & Technology and Analytics & Trading Solutions. In March 2022, the company completed the acquisition of CUSIP Global Service (CGS) for $2 billion in cash. This acquisition expands market opportunities of the company in the global capital markets. Indices is a good business to be in, with S&P Global being the market leader. Stats from last qtr include:
FDS is a high quality stock with 42 consecutive years of revenue growth. Profits have grown every-single year since the company went public in 1996. The secret to the recipe of growth-every-year is the company sells its software on a subscription basis (which gives it a steady stream of revenues each quarter) and passes along small fee increases each year. Thus, 5% or so user growth combined with 5% price increases and stock buybacks have made 12% profit growth possible in the past. Management buys back lots of stock and makes acquisitions that boost revenues and profits. The company also pays a dividend, which has increased for 23 consecutive years. April 2022’s increase was 8.5% to $0.89 per share, per qtr. FactSet is part of the Conservative Stock Portfolio. This is a fabulous buy-and-hold stock. |
One Year Chart |
![]() The Est. LTG of 13% is good. I used to think this was a 10-12% grower, but the success of the new additions to the platform is pushing growth up. Alas, the CUSIP acquisition has boosted growth during the past year, and now things will normalize next quarter. Qtrly profit growth has been great the past few qtrs. Growth is expected to simmer down though. Especially when we get NxtQtr. |
Earnings Table |
![]() Regional organic revenue growth rates were:
Growth was strongest with banking, asset owners, and wealth management clients. BMO Wealth Management selected Factset as its primary data provider, and this was a big contributor to the company’s 9% increase in workstations in the past year. Annual Profit Estimates increased this qtr. Management expects organic ASV to grow 8% to 9% in the medium term. Qtrly Profit Estimates are -5%, 12%, 4%, and 9%. Next qtr, analysts’ think that FDS revenue will grow 8%. ASV growth will slow as FDS is now lapping the CUSIP acquisition. Management sees instability in the banking sector and longer sales cycles in addition to budget constraints related to weak macro backdrop. |
Fair Value |
![]() FDS has a Fiscal year-end of August 31, so we are in the company’s Q3 now. |
Bottom Line |
![]() Factset is doing great right now. But the CUSIP acquisition was helping results the past 4 qtrs. Now, year-over-year comparisons will normalize. Management is also seeing slower decision making among clients. So, brace for this growth rate to slow a bit. What I do like is the P/E of 28 is reasonable for new investors to buy in at. FDS pulls back from 7th to 13th in the Conservative Growth Portfolio Power Rankings. The reason for the decline is the CUSIP boost to year-over-year results and there’s good competition at the top of the rankings. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio 13 of 31 |