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Category: Stock Market and Factset
Date: 27 September 2019 Stock Price: $245.71 We take a look at the 4th quarter earnings release of their 2019 fiscal year of Factset, a company that provides content and analytical services to investment professionals.
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About Factset
FactSet (NYSE:FDS) delivers superior content, analytics, and flexible technology to help more than 126,000 users see and seize opportunity sooner. We give investment professionals the edge to outperform with informed insights, workflow solutions across the portfolio lifecycle, and industry-leading support from dedicated specialists. We're proud to have been recognized with multiple awards for our analytical and data-driven solutions and repeatedly ranked as one of Fortune's 100 Best Companies to Work For® and a Best Workplace in the United Kingdom and France
Overview of Factset's latest earnings report
The numbers we are interested in (for the quarter):
- Revenue: $364.283 million (up from $345.861 million from the same quarter of the previous year)
- Revenue increased by 5.3% over the last 12 months
- Total operating expenses: $252.715 million (down from $256.505 million for the same quarter of the previous year)
- Total operating expenses increased by 6.07% over the last 12 months
- Net income: $91.527 million (up from $68.823 million for the same quarter of the previous year)
- Diluted income per share: $2.34 (up from $1.77 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 39.056 million (up from 38.879 million for the same quarter of the previous year)
- Cash and cash equivalents: $359.799 million
- Cash and cash equivalents per share: $9.21
- Cash and cash equivalents makes up 3.75% of Factset's market capital
- Cash and cash equivalents makes up 23.23% of Factset's total assets
- Accounts receivable: $146.309 million
- Accounts receivable makes up 9.4% of Factset's total assets
- Stockholders equity of Factset: $672.256 million
- Stockholders equity per share: $17.21
- Factset's is trading at 14.2 times its stockholders equity which is well outside the expected range of between 2 and 4 which most companies tend to trade at.
Factset's management commentary on the results and earnings guidance
NORWALK, Conn., September 26, 2019 - FactSet (the “Company”) (NYSE:FDS) (NASDAQ:FDS), a global provider of integrated financial information, analytical applications, and industry-leading service, today announced results for its fourth quarter ended August 31, 2019.
FactSet performed well in full year 2019 delivering solid revenue and strong EPS growth, despite market headwinds,” said Phil Snow, FactSet CEO. “To further our winning proposition in the marketplace, we will be accelerating critical investments over the next three years from a position of strength, capitalizing on industry trends and enhancing our core offerings. We are making investments today so that FactSet can continue to deliver long-term value for all our stakeholders.”
“We are pleased with our full year results especially as we exceeded our guidance on margin and EPS. Our dedication to operational improvements and cost discipline served our company well in fiscal 2019, and we plan to build upon this solid foundation,” said Helen Shan, FactSet CFO. “As we enter our next phase of growth, we are investing to grow our top line and continue to drive value creation and efficiency gains for our clients and higher total shareholder returns for our investors.”
Share Repurchase Program
FactSet repurchased 221,292 shares for $62.1 million during the fourth quarter under the Company’s existing share repurchase program. On June 24, 2019, the Board of Directors of FactSet approved an increase of $210 million to the existing share repurchase program. Including this increase. As of August 31, 2019, $239 million is currently available for share repurchases.
Annual Business Outlook
FactSet is providing its outlook for fiscal 2020. The following forward-looking statements reflect FactSet’s expectations as of today’s date. Given the risk factors, uncertainties and assumptions discussed below, actual results may differ materially. FactSet does not intend to update its forward-looking statements until its next quarterly results announcement, other than in publicly available statements.
Fiscal 2020 Expectations
• Organic ASV plus professional services is expected to increase in the range of $65 million and $85 million over fiscal 2019.
• GAAP revenue is expected to be in the range of $1.49 billion and $1.50 billion.
• GAAP operating margin is expected to be in the range of 28.5% and 29.5%.
• Adjusted operating margin is expected to be in the range of 31.5% and 32.5%.
• FactSet’s annual effective tax rate is expected to be in the range of 17.0% and 17.5%.
• GAAP diluted EPS is expected to be in the range of $8.70 and $9.00. Adjusted diluted EPS is expected to be in the range of $9.85 and $10.15. Both GAAP operating margin and GAAP diluted EPS guidance do not include certain effects of any non-recurring benefits or charges that may arise in fiscal 2020.
The image below shows the revenue per product and service category for Factset for the 4th quarter of 2019
FactSet performed well in full year 2019 delivering solid revenue and strong EPS growth, despite market headwinds,” said Phil Snow, FactSet CEO. “To further our winning proposition in the marketplace, we will be accelerating critical investments over the next three years from a position of strength, capitalizing on industry trends and enhancing our core offerings. We are making investments today so that FactSet can continue to deliver long-term value for all our stakeholders.”
“We are pleased with our full year results especially as we exceeded our guidance on margin and EPS. Our dedication to operational improvements and cost discipline served our company well in fiscal 2019, and we plan to build upon this solid foundation,” said Helen Shan, FactSet CFO. “As we enter our next phase of growth, we are investing to grow our top line and continue to drive value creation and efficiency gains for our clients and higher total shareholder returns for our investors.”
Share Repurchase Program
FactSet repurchased 221,292 shares for $62.1 million during the fourth quarter under the Company’s existing share repurchase program. On June 24, 2019, the Board of Directors of FactSet approved an increase of $210 million to the existing share repurchase program. Including this increase. As of August 31, 2019, $239 million is currently available for share repurchases.
Annual Business Outlook
FactSet is providing its outlook for fiscal 2020. The following forward-looking statements reflect FactSet’s expectations as of today’s date. Given the risk factors, uncertainties and assumptions discussed below, actual results may differ materially. FactSet does not intend to update its forward-looking statements until its next quarterly results announcement, other than in publicly available statements.
Fiscal 2020 Expectations
• Organic ASV plus professional services is expected to increase in the range of $65 million and $85 million over fiscal 2019.
• GAAP revenue is expected to be in the range of $1.49 billion and $1.50 billion.
• GAAP operating margin is expected to be in the range of 28.5% and 29.5%.
• Adjusted operating margin is expected to be in the range of 31.5% and 32.5%.
• FactSet’s annual effective tax rate is expected to be in the range of 17.0% and 17.5%.
• GAAP diluted EPS is expected to be in the range of $8.70 and $9.00. Adjusted diluted EPS is expected to be in the range of $9.85 and $10.15. Both GAAP operating margin and GAAP diluted EPS guidance do not include certain effects of any non-recurring benefits or charges that may arise in fiscal 2020.
The image below shows the revenue per product and service category for Factset for the 4th quarter of 2019
Factset (NYSE: FDS) stock price history
The image below, obtained from Google, shows the stock price history of Factset (NYSE: FDS) over the last 5 years. And it's been a very good time for Factset (FDS). 5 years ago Factset stock was trading around $124 a stock, and its currently it's trading at $245.71. That's a return of 98.1% over the 5 year period. Factset is trading at very close to the mid point between its 52 week high and its 52 week low, which suggests to us that the stock has no clear direction and is waiting for a catalyst to either drive the stock of Factset up or down. And based on the performance of the stock on 26 September 2019, in which it lost 9.4% we suspect the catalyst for Factset's stock direction might just have been their earnings release.
Recent coverage of Factset (NYSE:FDS)
The extract below shows recent coverage of Factset as obtained from Zacks
FactSet Research (FDS - Free Report) came out with quarterly earnings of $2.61 per share, beating the Zacks Consensus Estimate of $2.47 per share. This compares to earnings of $2.20 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 5.67%. A quarter ago, it was expected that this financial data firm would post earnings of $2.37 per share when it actually produced earnings of $2.62, delivering a surprise of 10.55%.
Over the last four quarters, the company has surpassed consensus EPS estimates four times. FactSet, which belongs to the Zacks Business - Information Services industry, posted revenues of $364.28 million for the quarter ended August 2019, surpassing the Zacks Consensus Estimate by 0.47%. This compares to year-ago revenues of $345.86 million. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. FactSet shares have added about 35.4% since the beginning of the year versus the S&P 500's gain of 19.1%.
Read the original article here
FactSet Research (FDS - Free Report) came out with quarterly earnings of $2.61 per share, beating the Zacks Consensus Estimate of $2.47 per share. This compares to earnings of $2.20 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 5.67%. A quarter ago, it was expected that this financial data firm would post earnings of $2.37 per share when it actually produced earnings of $2.62, delivering a surprise of 10.55%.
Over the last four quarters, the company has surpassed consensus EPS estimates four times. FactSet, which belongs to the Zacks Business - Information Services industry, posted revenues of $364.28 million for the quarter ended August 2019, surpassing the Zacks Consensus Estimate by 0.47%. This compares to year-ago revenues of $345.86 million. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. FactSet shares have added about 35.4% since the beginning of the year versus the S&P 500's gain of 19.1%.
Read the original article here
Factset (NYSE: FDS) latest stock valuation
So based on the earnings report and fiscal guidance of Factset (NYSE:FDS) what do we value Factset (FDS) stock at? Based on their latest earnings report our target (full value) price for Factset is $192.20 a stock. We therefore believe the stock of Factset is overvalued
We usually suggest long term fundamental and value investors look to enter the stock at least 10% below our target price, which in this case is $192.20 Therefore we believe the a good entry point into the stock is below $173. We believe the stock of Factset (FDS) will pull back from its currents levels as we cannot see how the stock can trade at its current price for long considering the earnings reported and the fiscal guidance provided. In our valuation of Factset we were very generous with the future earnings potential of the group over the next two years as well as taking into the account the share repurchase program and the effect it will have on their future earnings per share.
We usually suggest long term fundamental and value investors look to enter the stock at least 10% below our target price, which in this case is $192.20 Therefore we believe the a good entry point into the stock is below $173. We believe the stock of Factset (FDS) will pull back from its currents levels as we cannot see how the stock can trade at its current price for long considering the earnings reported and the fiscal guidance provided. In our valuation of Factset we were very generous with the future earnings potential of the group over the next two years as well as taking into the account the share repurchase program and the effect it will have on their future earnings per share.