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Reasons to Retain FactSet (FDS) Stock in Your Portfolio Now

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FactSet Research Systems Inc. (FDS - Free Report) has an impressive Growth Score of B. This style score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth.

FactSet’s fiscal 2023 and fiscal 2024 earnings are expected to improve 10% and 10.8%, respectively, year over year. Revenues are anticipated to rise 14.1% and 7% in fiscal 2023 and 2024, respectively.

Factors That Augur Well

FactSet has been engaged for more than 40 years in delivering extensive data, sophisticated analytics and flexible technology to global financial professionals, and is currently benefiting from a growing customer base and strong global presence. The company added 219 clients in the fourth quarter of fiscal 2022, taking the total to 7,538. The annual client retention rate was 92%. FactSet’s Annual Subscription Value plus professional services were up 17.6% year over year in the quarter.

FactSet had a cash and cash equivalent balance of $536 million at the end of fourth-quarter fiscal 2022 with no short-term debt to clear off. A strong cash position allows FactSet to pursue strategic acquisitions, invest in growth initiatives and return cash through regular quarterly dividend payments and share repurchases.

The March 2022 acquisition of CUSIP Global Services from S&P Global is expected to significantly boost FactSet’s open data strategy and expand its position in the global capital markets. FDS has paid dividends of $125.9 million, $117.9 million and $110.4 million in fiscal 2022, 2021 and 2020, respectively.

Some Risks

FactSet’s fourth-quarter fiscal 2022 current ratio (a measure of liquidity) stood at 1.99, lower than the current ratio of 2.12 reported at the end of third-quarter fiscal 2022 and the prior-year quarter’s 2.96. A decline in the current ratio is not desirable as it indicates that the company may face problems meeting its short-term debt obligations.

Zacks Rank and Stocks to Consider

FactSet currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks  Business Services sector are Booz Allen Hamilton Holding Corporation (BAH - Free Report) , Paychex, Inc. (PAYX - Free Report) and Cross Country Healthcare, Inc. (CCRN - Free Report) .

Booz Allen carries a Zacks Rank #2 (Buy) at present. BAH has a long-term earnings growth expectation of 7.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Booz Allen delivered a trailing four-quarter earnings surprise of 8.3%, on average.

Paychex carries a Zacks Rank #2 at present. PAYX has a long-term earnings growth expectation of 7.5%.

Paychex delivered a trailing four-quarter earnings surprise of 8.6%, on average.

Cross Country Healthcare carries a Zacks Rank of 2, currently. CCRN has a long-term earnings growth expectation of 10%.

CCRN delivered a trailing four-quarter earnings surprise of 26%, on average.

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