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Here's Why You Should Retain FactSet Stock in Your Portfolio Now
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Key Takeaways
FactSet is benefiting from recurring revenue growth, client wins and rising AI solution adoption.
FDS expanded its AI capabilities through partnerships and renewed major client agreements in fiscal 2026.
FDS faces margin pressure from higher AI and cloud spending, along with intense industry competition.
Shares of FactSet Research Systems Inc. (FDS - Free Report) have had a decent run over the past three months. The stock has risen 9.9% compared with the industry's 8.4% growth. The Zacks S&P 500 Composite rose 13.2% during the said time frame.
FDS has a Growth Score of B, which condenses key financial metrics to reflect a fair sense of the quality and sustainability of its growth.
The company’s fourth-quarter fiscal 2026 earnings are expected to increase 7.2% year over year. Earnings for fiscal 2026 and 2027 are projected to rise 4.4% and 11.2%, respectively, year over year. Revenues are expected to increase 6.2% in fiscal 2026 and 5.8% in fiscal 2027.
Factors That Bode Well for FDS
FactSet provides integrated financial information, analytical applications and industry-leading service for the global investment community. The company is benefiting from its recurring revenue model, with growth driven by increasing Annual Subscription Value (ASV). Its organic ASV increased 7.1% year over year to $2.48 billion in the third quarter of fiscal 2026, marking FactSet's fastest growth rate since the first quarter of fiscal 2024.
Recent client wins have also contributed to FDS’s top-line growth. During the last reported quarter, the company renewed a five-year enterprise contract with a leading global investment bank that broadened its use of FactSet's data offerings. It secured a partnership with LPL Financial to power cloud-native trading applications using FactSet's real-time data platform.
Technological advancements and the rapid adoption of artificial intelligence (AI) have also become key catalysts for FDS’ subscription growth. It has been expanding its customer base and enhancing operational efficiency. The company reported strong Data solutions segment growth in the third quarter of fiscal 2026, driven by increasing adoption of its Model Context Protocol platform. Management also highlighted that more than 90% of FactSet's top 50 clients currently use four or more AI solutions.
Strategic partnerships with multiple organizations are expanding FDS’ AI capabilities. FDS formed a strategic partnership with Google Cloud to bring its financial intelligence capabilities into Gemini Enterprise, expand agent interoperability and develop next-generation AI agents for financial workflows. The company is broadening its AI capabilities across investment banking, asset management and wealth management applications through partnerships with InSync Analytics, Jynbios AI and Tiffin AI.
FactSet consistently rewards its shareholders through dividends and share repurchases. In fiscal 2023, 2024 and 2025, the company repurchased shares worth $177 million, $235 million and $300.4 million, respectively, while paying out $139 million, $151 million and $160 million, respectively, in dividends.
Key Risks to Watch
FDS’ continued investment in compensation, cloud infrastructure and AI tools has resulted in elevated operating expenses. In the third quarter of fiscal 2026, the company reported an operating margin of 26.7%, down from 33.2% in the year-ago quarter. The adjusted operating margin also declined to 34% from 36.8% a year ago.
Stiff competition from giants such as Bloomberg L.P., Thomson Reuters Inc. and S&P Global Market Intelligence also affects FDS’s financial performance. This competition can limit pricing power, increase operational expenses and potentially reduce market share. As a result, the company must balance competitive pricing strategies with the need to maintain healthy profit margins.
FDS has grown through acquisitions, but the combined performance has fallen short of targets due to underestimated intercompany revenues. Since the company continues to pursue acquisitions as a growth strategy, FDS could face integration challenges with newly acquired businesses in the future.
Verisk Analytics also holds a Zacks Rank of 2 at present. It has a long-term earnings growth expectation of 11.7%. VRSK's earnings beat estimates in each of the past four quarters, with the surprise being 6.3%, on average.
View the Zacks #1 Rank List
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Here's Why You Should Retain FactSet Stock in Your Portfolio Now
Key Takeaways
Shares of FactSet Research Systems Inc. (FDS - Free Report) have had a decent run over the past three months. The stock has risen 9.9% compared with the industry's 8.4% growth. The Zacks S&P 500 Composite rose 13.2% during the said time frame.
FDS has a Growth Score of B, which condenses key financial metrics to reflect a fair sense of the quality and sustainability of its growth.
The company’s fourth-quarter fiscal 2026 earnings are expected to increase 7.2% year over year. Earnings for fiscal 2026 and 2027 are projected to rise 4.4% and 11.2%, respectively, year over year. Revenues are expected to increase 6.2% in fiscal 2026 and 5.8% in fiscal 2027.
Factors That Bode Well for FDS
FactSet provides integrated financial information, analytical applications and industry-leading service for the global investment community. The company is benefiting from its recurring revenue model, with growth driven by increasing Annual Subscription Value (ASV). Its organic ASV increased 7.1% year over year to $2.48 billion in the third quarter of fiscal 2026, marking FactSet's fastest growth rate since the first quarter of fiscal 2024.
FactSet Research Systems Inc. Revenue (TTM)
FactSet Research Systems Inc. revenue-ttm | FactSet Research Systems Inc. Quote
Recent client wins have also contributed to FDS’s top-line growth. During the last reported quarter, the company renewed a five-year enterprise contract with a leading global investment bank that broadened its use of FactSet's data offerings. It secured a partnership with LPL Financial to power cloud-native trading applications using FactSet's real-time data platform.
Technological advancements and the rapid adoption of artificial intelligence (AI) have also become key catalysts for FDS’ subscription growth. It has been expanding its customer base and enhancing operational efficiency. The company reported strong Data solutions segment growth in the third quarter of fiscal 2026, driven by increasing adoption of its Model Context Protocol platform. Management also highlighted that more than 90% of FactSet's top 50 clients currently use four or more AI solutions.
Strategic partnerships with multiple organizations are expanding FDS’ AI capabilities. FDS formed a strategic partnership with Google Cloud to bring its financial intelligence capabilities into Gemini Enterprise, expand agent interoperability and develop next-generation AI agents for financial workflows. The company is broadening its AI capabilities across investment banking, asset management and wealth management applications through partnerships with InSync Analytics, Jynbios AI and Tiffin AI.
FactSet consistently rewards its shareholders through dividends and share repurchases. In fiscal 2023, 2024 and 2025, the company repurchased shares worth $177 million, $235 million and $300.4 million, respectively, while paying out $139 million, $151 million and $160 million, respectively, in dividends.
Key Risks to Watch
FDS’ continued investment in compensation, cloud infrastructure and AI tools has resulted in elevated operating expenses. In the third quarter of fiscal 2026, the company reported an operating margin of 26.7%, down from 33.2% in the year-ago quarter. The adjusted operating margin also declined to 34% from 36.8% a year ago.
Stiff competition from giants such as Bloomberg L.P., Thomson Reuters Inc. and S&P Global Market Intelligence also affects FDS’s financial performance. This competition can limit pricing power, increase operational expenses and potentially reduce market share. As a result, the company must balance competitive pricing strategies with the need to maintain healthy profit margins.
FDS has grown through acquisitions, but the combined performance has fallen short of targets due to underestimated intercompany revenues. Since the company continues to pursue acquisitions as a growth strategy, FDS could face integration challenges with newly acquired businesses in the future.
FactSet currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
A couple of better-ranked stocks in the broader Zacks Business Services sector are Veralto Corporation (VLTO - Free Report) and Verisk Analytics (VRSK - Free Report) .
Veralto carries a Zacks Rank #2 (Buy) at present. It has a long-term earnings growth expectation of 8.4%. VLTO delivered a trailing four-quarter earnings surprise of 4.9%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Verisk Analytics also holds a Zacks Rank of 2 at present. It has a long-term earnings growth expectation of 11.7%. VRSK's earnings beat estimates in each of the past four quarters, with the surprise being 6.3%, on average.