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) Up 6.6% Since Last Earnings Report: Can It Continue?
Read MoreHide Full Article
A month has gone by since the last earnings report for FactSet Research (FDS - Free Report) . Shares have added about 6.6% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is FactSet due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
FactSet reported mixed second-quarter fiscal 2020 results, wherein earnings topped the Zacks Consensus Estimate but revenues missed the same.
The company reported adjusted earnings per share of $2.55, which surpassed the Zacks Consensus Estimate by 3.2% and increased 5.4% on a year-over-year basis driven by lower tax rate.
Revenues in Detail
FactSet’s revenues of $369.8 million marginally missed the Zacks Consensus Estimate and increased 4.2% year over year. The uptick was driven by higher sales of analytics, content and technology solutions (CTS) as well as wealth management solutions.
Organic revenues increased 4.2% year over year to $371 million. Region-wise, U.S. revenues increased to $232.7 million from $223.3 million in the year-ago quarter. International revenues were $137.1 million compared with $131.6 million in the year-ago quarter.
ASV Plus Professional Services
FactSet’s Annual Subscription Value (ASV) plus professional services was at $1.5 billion. Organically, it increased 4.3% year over year. Buy-side and sell-side ASV growth rates were 4.5% and 2.9%, respectively. Nearly 84.1% of organic ASV was generated by buy-side clients. The rest were derived from sell-side firms performing functions like mergers and acquisitions advisory work, equity research and capital markets services.
ASV generated from the United States was $925.6 million, up 3.9% from the prior-year quarter’s level. Internationally, ASV was $554 million, up 4.5% year over year. FactSet added 87 clients in the reported quarter, taking the total number to 5,688. Annual client retention was 89%. At the end of the quarter, total employee count was 9,892, up 3.8% year over year.
Operating Results
Adjusted operating income came in at $117.9 million, down slightly from the year-ago quarter’s figure. Adjusted operating margin decreased to 31.8%, from 33.2% in the year-ago quarter. Selling, general and administration expenses increased 7.7% to $87.3 million. Total operating expenses increased 7% to $263.5 million.
Balance Sheet and Cash Flow
FactSet exited second-quarter fiscal 2020 with cash and cash equivalents of $343.5 million compared with $336.2 million in the previous quarter. Long-term debt of $574.3 million was roughly flat year over year. In the quarter, the company generated $99.7 million of cash from operating activities and capital expenditure was $25.1 million. Free cash flow was $74.6 million.
FactSet repurchased 267,500 shares for $74.2 million during the reported quarter. As of Mar 26, 2020, the company had $300 million available for share repurchases. A quarterly dividend of $27.1 million was paid out on Mar 19.
Fiscal 2020 Outlook
FactSet reaffirmed its revenue, operating margin and EPS outlook for fiscal 2020. The company continues to expect adjusted EPS between $9.85 and $10.15.
Revenues are expected between $1.49 billion and $1.5 billion. Adjusted operating margin is anticipated to be in the range of 31.5%-32.5%. Anticipated annual effective tax rate is expected between 17% and 17.5%.
The company trimmed its organic ASV plus professional services expectation in response to the coronavirus led changes in business conditions. The metric is now projected to increase in the range of $50-$75 million, compared with the previous projection of $65-$85 million.
How Have Estimates Been Moving Since Then?
Estimates revision followed a downward path over the past two months.
VGM Scores
At this time, FactSet has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
FactSet has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
FactSet (FDS) Up 6.6% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for FactSet Research (FDS - Free Report) . Shares have added about 6.6% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is FactSet due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
FactSet Beats Q2 Earnings Estimates, Lags Revenues
FactSet reported mixed second-quarter fiscal 2020 results, wherein earnings topped the Zacks Consensus Estimate but revenues missed the same.
The company reported adjusted earnings per share of $2.55, which surpassed the Zacks Consensus Estimate by 3.2% and increased 5.4% on a year-over-year basis driven by lower tax rate.
Revenues in Detail
FactSet’s revenues of $369.8 million marginally missed the Zacks Consensus Estimate and increased 4.2% year over year. The uptick was driven by higher sales of analytics, content and technology solutions (CTS) as well as wealth management solutions.
Organic revenues increased 4.2% year over year to $371 million. Region-wise, U.S. revenues increased to $232.7 million from $223.3 million in the year-ago quarter. International revenues were $137.1 million compared with $131.6 million in the year-ago quarter.
ASV Plus Professional Services
FactSet’s Annual Subscription Value (ASV) plus professional services was at $1.5 billion. Organically, it increased 4.3% year over year. Buy-side and sell-side ASV growth rates were 4.5% and 2.9%, respectively. Nearly 84.1% of organic ASV was generated by buy-side clients. The rest were derived from sell-side firms performing functions like mergers and acquisitions advisory work, equity research and capital markets services.
ASV generated from the United States was $925.6 million, up 3.9% from the prior-year quarter’s level. Internationally, ASV was $554 million, up 4.5% year over year. FactSet added 87 clients in the reported quarter, taking the total number to 5,688. Annual client retention was 89%. At the end of the quarter, total employee count was 9,892, up 3.8% year over year.
Operating Results
Adjusted operating income came in at $117.9 million, down slightly from the year-ago quarter’s figure. Adjusted operating margin decreased to 31.8%, from 33.2% in the year-ago quarter. Selling, general and administration expenses increased 7.7% to $87.3 million. Total operating expenses increased 7% to $263.5 million.
Balance Sheet and Cash Flow
FactSet exited second-quarter fiscal 2020 with cash and cash equivalents of $343.5 million compared with $336.2 million in the previous quarter. Long-term debt of $574.3 million was roughly flat year over year. In the quarter, the company generated $99.7 million of cash from operating activities and capital expenditure was $25.1 million. Free cash flow was $74.6 million.
FactSet repurchased 267,500 shares for $74.2 million during the reported quarter. As of Mar 26, 2020, the company had $300 million available for share repurchases. A quarterly dividend of $27.1 million was paid out on Mar 19.
Fiscal 2020 Outlook
FactSet reaffirmed its revenue, operating margin and EPS outlook for fiscal 2020. The company continues to expect adjusted EPS between $9.85 and $10.15.
Revenues are expected between $1.49 billion and $1.5 billion. Adjusted operating margin is anticipated to be in the range of 31.5%-32.5%. Anticipated annual effective tax rate is expected between 17% and 17.5%.
The company trimmed its organic ASV plus professional services expectation in response to the coronavirus led changes in business conditions. The metric is now projected to increase in the range of $50-$75 million, compared with the previous projection of $65-$85 million.
How Have Estimates Been Moving Since Then?
Estimates revision followed a downward path over the past two months.
VGM Scores
At this time, FactSet has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
FactSet has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.