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FactSet (FDS) Rides on Robust Top Line, Low Liquidity Ails

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·3-min read
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FactSet Research Systems Inc. FDS looks strong on the back of higher organic revenues, increase in annual subscription value and strong global network.

The company recently reported third-quarter fiscal 2022 adjusted EPS of $3.76 that surpassed the Zacks Consensus Estimate by 18.2% and increased 38.2% year over year. FactSet’s revenues of $488.8 million in the quarter surpassed the Zacks Consensus Estimate by 2.7% and increased 22.3% year over year.

How is FactSet Doing?

FactSet’s growing customer base, high client retention rate (92%) and solid revenue growth should positively impact results over the long term. In third-quarter fiscal 2022, organic revenues increased 10.5% year over year to $441.7 million. Annual Subscription Value (ASV) plus professional services were $1.94 billion, up 19.8% year over year. The company added 147 clients in the quarter, taking the total number to 7,319.

FactSet Research Systems Inc. Revenue (TTM)

FactSet Research Systems Inc. Revenue (TTM)
FactSet Research Systems Inc. Revenue (TTM)

FactSet Research Systems Inc. revenue-ttm | FactSet Research Systems Inc. Quote

The recent buyout of CUSIP Global Services from S&P Global SPGI is expected to significantly boost FactSet’s open data strategy and expand its position in the global capital markets.

FactSet has a consistent track record of rewarding its shareholders through share repurchases and dividend payments. The company repurchased shares worth $264.7 million, $199.6 million and $220.4 million, and paid $117.9 million, $110.4 million and $100.1 million in dividends in fiscal 2021, 2020 and 2019, respectively. Such moves indicate the company’s commitment to creating value for shareholders and underline its confidence in its business.

FactSet’s current ratio (a measure of liquidity) at the end of third-quarter fiscal 2022 stood at 2.00, lower than the current ratio of 3.72 reported at the end of fiscal second quarter and the prior-year quarter’s 3.28. Decreasing current ratio is not desirable as it indicates that the company may have problems meeting its short-term debt obligations.

Zacks Rank & Stocks to Consider

FactSet currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Business Services sector that investors can consider are Cross Country Healthcare CCRN and Avis Budget CAR, both sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Cross Country Healthcare has an expected earnings growth rate of 55.9% for the current year. CCRN has a trailing four-quarter earnings surprise of 29.2%, on average.

Cross Country Healthcare has a long-term earnings growth rate of 6.9%.

Avis Budget has an expected earnings growth rate of 74.7% for the current year. CAR delivered a trailing four-quarter earnings surprise of 102.1%, on average.

Avis Budget has a long-term earnings growth rate of 19.4%.


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