We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
FactSet (FDS) Benefits From Organic Growth, Competition Rife
Read MoreHide Full Article
In a year’s time, shares of FactSet Research Systems Inc. (FDS - Free Report) have gained 23.9% compared with the industry’s rise of 21.1%
The company’s fourth-quarter fiscal 2018 earnings and revenues missed the Zacks Consensus Estimate. Adjusted earnings per share (EPS) of $2.20 lagged the consensus mark by 2 cents but improved 15.8% year over year. Revenues of $345.9 million missed the consensus mark by a slight margin but rose 5.9% on a year-over-year basis.
Nevertheless, FactSet has an impressive surprise history. It beat earnings estimates in three of the trailing four quarters, the average being 1.9%. For the first quarter, the consensus estimate for earnings declined marginally in the past 30 days.
Continuous Organic Growth
The company continues to grow organically on the back of higher sales from international price increase and analytics, data feed products as well as workstations. In the reported quarter, organic revenues improved 5.3% to $347.1 million, primarily owing to accelerated sales of content and technology solutions (CTS), analytics products as well as wealth management solutions. Region-wise, FactSet reported 5% organic growth from the United States and 6% internationally. The company’s ASV organic growth rate was 5.7% in the reported quarter.
Strengthening Global Presence
In a bid to strengthen global presence, the company has recently opened a new office in Shanghai to provide data and analytic solutions for an increasing number of investors and investment managers in China. Notably, the company’s ASV recorded 11% growth from the Asia-Pacific region in the last reported quarter. The region also witnessed new client addition and higher sales to existing clients.
Moreover, FactSet is enjoying robust growth across the European operations as it generates around 25-27% of revenues from the region. In the fourth quarter, the company’s ASV recorded 5% organic growth from Europe.
Consistency in Rewarding Shareholders
FactSet’s consistent record of returning value to shareholders in the form of dividend and share repurchases also raise optimism.
On Aug 10, the company declared quarterly cash dividend of 64 cents per share that was paid on Sep 18, 2018 to shareholders of record at the close of business on Aug 31. FactSet has an impressive dividend payment history. In fiscal 2017 and fiscal 2016, the company paid dividends of $80.9 million and $74.2 million, respectively.
On the share repurchase front, the company repurchased 329,478 shares for $67.5 million in the last reported quarter. The company still has $241.7 million under its existing share repurchase program. In fiscal 2017, FactSet repurchased 1.6 million shares for $252.8 million compared with 1.5 million shares for $232.3 million in fiscal 2016. Such moves indicate the company’s commitment to create value for shareholders and underline confidence in the business.
Risks
FactSet’s balance sheet is highly leveraged. As of Aug 31, 2018, long-term debt was $574.78 million, while cash and cash equivalents were $208.6 million. Such a cash position implies that the company needs to generate adequate amount of operating cash flow to lower debt burden. Also, high debt may limit the company’s future expansion and worsen risk profile.
The company continues to face tough competition from other players in the market that provide financial market data, analytics and related services. These competitors may be able to expand their offerings and data content more effectively, price their products more aggressively or respond more rapidly to situations developing in the marketplace to attract new clients and retain existing ones. In spite of enjoying a technological advantage, pricing pressure continues to be a major headwind.
The long-term expected EPS (three to five years) growth rate for Paychex, Broadridge and Interpublic is 8%, 10% and 7.7%, respectively.
Best Electric Car Stock? You'll Never Guess It.
Zacks Research has released a report that may shock many investors. One stock stands out as the best way to invest in the surge to electric cars. And it's not the one you may think!
Much like petroleum 150 years ago, lithium battery power is set to shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge. With battery prices plummeting and charging stations set to multiply, revenues that were already at $31 billion in 2016 are expected to blast to over $67 billion by the end of 2022.
Image: Bigstock
FactSet (FDS) Benefits From Organic Growth, Competition Rife
In a year’s time, shares of FactSet Research Systems Inc. (FDS - Free Report) have gained 23.9% compared with the industry’s rise of 21.1%
The company’s fourth-quarter fiscal 2018 earnings and revenues missed the Zacks Consensus Estimate. Adjusted earnings per share (EPS) of $2.20 lagged the consensus mark by 2 cents but improved 15.8% year over year. Revenues of $345.9 million missed the consensus mark by a slight margin but rose 5.9% on a year-over-year basis.
Nevertheless, FactSet has an impressive surprise history. It beat earnings estimates in three of the trailing four quarters, the average being 1.9%. For the first quarter, the consensus estimate for earnings declined marginally in the past 30 days.
Continuous Organic Growth
The company continues to grow organically on the back of higher sales from international price increase and analytics, data feed products as well as workstations. In the reported quarter, organic revenues improved 5.3% to $347.1 million, primarily owing to accelerated sales of content and technology solutions (CTS), analytics products as well as wealth management solutions. Region-wise, FactSet reported 5% organic growth from the United States and 6% internationally. The company’s ASV organic growth rate was 5.7% in the reported quarter.
Strengthening Global Presence
In a bid to strengthen global presence, the company has recently opened a new office in Shanghai to provide data and analytic solutions for an increasing number of investors and investment managers in China. Notably, the company’s ASV recorded 11% growth from the Asia-Pacific region in the last reported quarter. The region also witnessed new client addition and higher sales to existing clients.
Moreover, FactSet is enjoying robust growth across the European operations as it generates around 25-27% of revenues from the region. In the fourth quarter, the company’s ASV recorded 5% organic growth from Europe.
Consistency in Rewarding Shareholders
FactSet’s consistent record of returning value to shareholders in the form of dividend and share repurchases also raise optimism.
On Aug 10, the company declared quarterly cash dividend of 64 cents per share that was paid on Sep 18, 2018 to shareholders of record at the close of business on Aug 31. FactSet has an impressive dividend payment history. In fiscal 2017 and fiscal 2016, the company paid dividends of $80.9 million and $74.2 million, respectively.
On the share repurchase front, the company repurchased 329,478 shares for $67.5 million in the last reported quarter. The company still has $241.7 million under its existing share repurchase program. In fiscal 2017, FactSet repurchased 1.6 million shares for $252.8 million compared with 1.5 million shares for $232.3 million in fiscal 2016. Such moves indicate the company’s commitment to create value for shareholders and underline confidence in the business.
Risks
FactSet’s balance sheet is highly leveraged. As of Aug 31, 2018, long-term debt was $574.78 million, while cash and cash equivalents were $208.6 million. Such a cash position implies that the company needs to generate adequate amount of operating cash flow to lower debt burden. Also, high debt may limit the company’s future expansion and worsen risk profile.
The company continues to face tough competition from other players in the market that provide financial market data, analytics and related services. These competitors may be able to expand their offerings and data content more effectively, price their products more aggressively or respond more rapidly to situations developing in the marketplace to attract new clients and retain existing ones. In spite of enjoying a technological advantage, pricing pressure continues to be a major headwind.
Zacks Rank & Key Picks
Currently, FactSet carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader Business Services Sector include Paychex, Inc. (PAYX - Free Report) , Broadridge Financial Solutions, Inc. (BR - Free Report) and The Interpublic Group of Companies, Inc. (IPG - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The long-term expected EPS (three to five years) growth rate for Paychex, Broadridge and Interpublic is 8%, 10% and 7.7%, respectively.
Best Electric Car Stock? You'll Never Guess It.
Zacks Research has released a report that may shock many investors. One stock stands out as the best way to invest in the surge to electric cars. And it's not the one you may think!
Much like petroleum 150 years ago, lithium battery power is set to shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge. With battery prices plummeting and charging stations set to multiply, revenues that were already at $31 billion in 2016 are expected to blast to over $67 billion by the end of 2022.
See Zacks Best EV Stock Free >>