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What's in Store for FactSet Research (FDS) in Q1 Earnings?

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FactSet Research Systems Inc. (FDS - Free Report) is set to report first-quarter fiscal 2017 results on Dec 20. Last quarter, the company posted a negative earnings surprise of 0.59%. Let’s see how things are shaping up for this announcement.

Factors to Consider

FactSet reported dismal fourth-quarter fiscal 2016 results. Nonetheless, year-over-year comparisons were favorable on both the counts. Moreover, the company has a high client retention ratio, which is a positive. Also, ASV increased year over year and the company added a good number of clients.

The share repurchase program is expected to support earnings in the long run apart from boosting shareholders’ value.

The company continues with product innovation across its segments with special emphasis on financial services to gain more customers. Moreover, the company’s acquisitions of Portware, Revere Data, Matrix Data and Code Red will enhance its product suite and help it to evolve as a global financial database company. It will also help FactSet to maximize value for its partners and provide exclusive content set.

Nonetheless, competition from Bloomberg L.P., Dow Jones & Company Inc., MSCI Inc. (MSCI - Free Report) and Thomson Reuters, which are also introducing substitute products at competitive prices, is a headwind.

FACTSET RESH Price and EPS Surprise

FACTSET RESH Price and EPS Surprise | FACTSET RESH Quote

Earnings Whispers

Our proven model does not conclusively show that FactSet will beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.70 per share. Hence, the difference is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Although FactSet’s Zacks Rank #3 increases the predictive power of ESP, its 0.00% ESP makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are a couple of stocks that you may consider, as our model shows that they have the right combination of elements to post an earnings beat:

Marvell Technology Group Ltd. (MRVL - Free Report) , with an Earnings ESP of +8.33% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here

FedEx Corporation (FDX - Free Report) , with an Earnings ESP of +1.03% and a Zacks Rank #3

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