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Here's Why You Should Retain FactSet Stock in Your Portfolio Now
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Key Takeaways
FactSet shares rose 16% in three months, outpacing the industry's 3.8% gain and the S&P 500's 5.2%.
Organic ASV rose 7.1% to $2.49B in Q3 fiscal 2026, with annual ASV retention remaining above 95%.
FDS faces margin and liquidity pressure as operating margin fell to 34% and the current ratio to 0.68.
Shares of FactSet (FDS - Free Report) have had a decent run over the past three months. The stock has risen 16% compared with the industry's 3.8% growth. The Zacks S&P 500 Composite increased 5.2% during that period.
Image Source: Zacks Investment Research
The company’s fourth-quarter fiscal 2026 earnings are expected to increase 6.2% year over year. Its fiscal 2026 and 2027 earnings are projected to rise 4.6% and 11.5%, respectively. Revenues are anticipated to grow 6.4% in fiscal 2026 and 5.9% in fiscal 2027.
Factors That Bode Well for FDS’ Success
Recurring Revenue Strength:FactSet benefits from resilient subscription demand across core workflows. Organic Annual Subscription Value (ASV) increased 7.1% year over year to $2.49 billion in the third quarter of fiscal 2026, with gains across regions and client types. Annual ASV retention remained above 95%, while enterprise renewal terms extended by 30% on average. Continued client demand for differentiated content, analytics and workflow solutions supports a favorable recurring-revenue outlook.
Broad-Based Regional Growth: The company continues to deliver broad-based regional momentum, with organic ASV growth holding steady or improving across key geographies. In the third quarter of fiscal 2026, Americas revenues rose 7% organically to $407.2 million, supported by a $1.62-billion ASV base. Europe, the Middle East and Africa revenues increased 5.3% organically to $152 million, while Asia Pacific revenues advanced 10.5% to $63.7 million, with ASV up 10% organically. This regional strength supports a favorable revenue outlook.
Consistent Dividend & Share Buybacks: The company maintains a consistent record of shareholder returns through buybacks and dividends. Repurchases rose from $176.7 million in fiscal 2023 to $300.5 million in fiscal 2025, while dividends increased to $160.0 million. In the third quarter of fiscal 2026, the company returned $243.4 million to shareholders, comprising $203.1 million in share repurchases and $40.3 million in dividends. Sustained capital returns support FactSet’s shareholder-friendly profile.
Strong Cash Generation Supports Financial Flexibility:FactSet continues to generate steady cash flow, supporting investment and shareholder returns. Operating cash flow increased from $645.6 million in fiscal 2023 to $726.3 million in fiscal 2025, while free cash flow rose from about $584.8 million to $617.5 million. Momentum continued in the third quarter of fiscal 2026, with free cash flow up 11% year over year to $254 million. Sustained cash generation supports continued financial flexibility and long-term value creation.
Watch Out for These Risks to FDS Stock
Competitive Pressure: FactSet faces sustained competition from large financial-data providers, private platforms and specialized technology firms. Rivals continue to expand alternative data, analytics and artificial intelligence (AI) capabilities, while some compete on price. Wider access to lower-cost information and AI tools could weaken demand for paid services. These pressures may limit pricing power, client retention and sustained ASV growth.
Margin Pressure: The company’s rising compensation, technology and AI investments are weighing on profitability. Adjusted operating margin fell from 37.8% in fiscal 2024 to 36.3% in fiscal 2025 and 34.0% in the third quarter of fiscal 2026. Management’s 34.0-35.5% fiscal 2026 guidance suggests investment spending will continue to constrain near-term margin expansion.
Liquidity Risk: FDS’ near-term liquidity weakened in fiscal 2026 as current liabilities rose above current assets, largely due to $499.2 million of debt classified as current. The current ratio fell sequentially from 1.43 to about 0.68 at the end of the third quarter of fiscal 2026. Despite healthy cash flow and revolver access, elevated near-term obligations could limit financial flexibility.
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Here's Why You Should Retain FactSet Stock in Your Portfolio Now
Key Takeaways
Shares of FactSet (FDS - Free Report) have had a decent run over the past three months. The stock has risen 16% compared with the industry's 3.8% growth. The Zacks S&P 500 Composite increased 5.2% during that period.
Image Source: Zacks Investment Research
The company’s fourth-quarter fiscal 2026 earnings are expected to increase 6.2% year over year. Its fiscal 2026 and 2027 earnings are projected to rise 4.6% and 11.5%, respectively. Revenues are anticipated to grow 6.4% in fiscal 2026 and 5.9% in fiscal 2027.
Factors That Bode Well for FDS’ Success
Recurring Revenue Strength: FactSet benefits from resilient subscription demand across core workflows. Organic Annual Subscription Value (ASV) increased 7.1% year over year to $2.49 billion in the third quarter of fiscal 2026, with gains across regions and client types. Annual ASV retention remained above 95%, while enterprise renewal terms extended by 30% on average. Continued client demand for differentiated content, analytics and workflow solutions supports a favorable recurring-revenue outlook.
Broad-Based Regional Growth: The company continues to deliver broad-based regional momentum, with organic ASV growth holding steady or improving across key geographies. In the third quarter of fiscal 2026, Americas revenues rose 7% organically to $407.2 million, supported by a $1.62-billion ASV base. Europe, the Middle East and Africa revenues increased 5.3% organically to $152 million, while Asia Pacific revenues advanced 10.5% to $63.7 million, with ASV up 10% organically. This regional strength supports a favorable revenue outlook.
Consistent Dividend & Share Buybacks: The company maintains a consistent record of shareholder returns through buybacks and dividends. Repurchases rose from $176.7 million in fiscal 2023 to $300.5 million in fiscal 2025, while dividends increased to $160.0 million. In the third quarter of fiscal 2026, the company returned $243.4 million to shareholders, comprising $203.1 million in share repurchases and $40.3 million in dividends. Sustained capital returns support FactSet’s shareholder-friendly profile.
Strong Cash Generation Supports Financial Flexibility: FactSet continues to generate steady cash flow, supporting investment and shareholder returns. Operating cash flow increased from $645.6 million in fiscal 2023 to $726.3 million in fiscal 2025, while free cash flow rose from about $584.8 million to $617.5 million. Momentum continued in the third quarter of fiscal 2026, with free cash flow up 11% year over year to $254 million. Sustained cash generation supports continued financial flexibility and long-term value creation.
Watch Out for These Risks to FDS Stock
Competitive Pressure: FactSet faces sustained competition from large financial-data providers, private platforms and specialized technology firms. Rivals continue to expand alternative data, analytics and artificial intelligence (AI) capabilities, while some compete on price. Wider access to lower-cost information and AI tools could weaken demand for paid services. These pressures may limit pricing power, client retention and sustained ASV growth.
Margin Pressure: The company’s rising compensation, technology and AI investments are weighing on profitability. Adjusted operating margin fell from 37.8% in fiscal 2024 to 36.3% in fiscal 2025 and 34.0% in the third quarter of fiscal 2026. Management’s 34.0-35.5% fiscal 2026 guidance suggests investment spending will continue to constrain near-term margin expansion.
Liquidity Risk: FDS’ near-term liquidity weakened in fiscal 2026 as current liabilities rose above current assets, largely due to $499.2 million of debt classified as current. The current ratio fell sequentially from 1.43 to about 0.68 at the end of the third quarter of fiscal 2026. Despite healthy cash flow and revolver access, elevated near-term obligations could limit financial flexibility.
FDS' Zacks Rank and Stocks to Consider
FactSet has a Zacks Rank #3 (Hold) at present.
A couple of better-ranked stocks in the broader Business Services sector are Thomson Reuters Corporation (TRI - Free Report) and Veralto Corporation (VLTO - Free Report) .
Thomson Reuters carries a Zacks Rank #2 (Buy) at present. It has a long-term earnings growth expectation of 11.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
TRI delivered a trailing four-quarter earnings surprise of 2.7%, on average.
Veralto also carries a Zacks Rank of 2 at present. It has a long-term earnings growth expectation of 8%.
VLTO beat earnings estimates in each of the trailing four quarters, with an average earnings surprise of 6.6%.