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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 2024 earnings are expected to improve 10.4% and 9.9%, respectively, year over year. Revenues are anticipated to rise 13.2% and 7.4% in fiscal 2023 and 2024, respectively.

Tailwinds

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 93 clients in the first quarter of fiscal 2023, taking the total to 7,631. The annual client retention rate was 92%. The company’s Annual Subscription Value plus professional services were up 18.2% year over year in the quarter.

FactSet had a cash and cash equivalent balance of $470 million at the end of first-quarter fiscal 2023 with no short-term debt to clear off. A strong cash position allows the company to pursue strategic acquisitions, invest in growth initiatives and return cash through regular quarterly dividend payments. FDS paid dividends of $125.9 million, $117.9 million and $110.4 million in fiscal 2022, 2021 and 2020, respectively.

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.

Some Risks

FactSet’s first-quarter fiscal 2023 current ratio (a measure of liquidity) was 2.16, lower than the current ratio of 3.48 reported at the end of first-quarter fiscal 2022. 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).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the broader Zacks Business Services sector are Trane Technologies (TT - Free Report)  and The Interpublic Group of Companies (IPG - Free Report) .

Trane Technologies sports a Zacks Rank #1 at present. TT has a long-term earnings growth expectation of 9.8%.

Trane delivered a trailing four-quarter earnings surprise of 8.2% on average.

Interpublic currently sports a Zacks Rank #1. IPG has a long-term earnings growth expectation of 4.61%.

IPG delivered a trailing four-quarter earnings surprise of 8.2% on average.

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