FactSet FDS shares have improved 4.9% compared with the 14.3% rally of its industry and the 8.1% rise of the Zacks S&P 500 Composite.

FDS’s revenues are anticipated to increase 5% and 6% year over year in 2025 and 2026, respectively. Earnings are estimated to rise 4% in 2025 and 7.7% in 2026.

Factors That Auger Well for FactSet’s Success

The company is benefiting from a growing customer base and a strong global presence. In fiscal 2024, organic revenues increased 5.7% year over year to $2.2 billion. We anticipate a year-over-year increase of 4.9% in fiscal 2025. The company added 296 clients, taking the total number to 8,217 from the preceding year’s 7,921. This is a testament to FDS’s ability to acquire clients by leveraging the quality of its offerings.

The company’s Annual Subscription Value (ASV) of $2.3 billion increased 4.8% year over year. Region-wise, FactSet’s ASV generated $1.5 billion in revenues from the United States, up 6.1% year over year. Organic ASV from the EMEA and the Asia Pacific regions was $570.3 million and $230.6 million, up 1.8% and 7.1% year over year, respectively.

In fiscal 2024, 2023, 2022 and 2021, FactSet repurchased shares worth $235.2 million, $176.7 million, 199.6 million and $264.7 million, respectively. The company paid out dividends of $150.7 million, $138.6 million, 110.4 million and $117.9 million in fiscal 2024, 2023, 2022 and 2021, respectively. Such moves indicate the company’s commitment to creating value for shareholders and underline its confidence in its business.

FactSet and Irwin partnered to integrate the latter's investor relations CRM with FDS's Workstation, creating a unified solution for IR professionals. Also, FDS collaborated with LightPoint, offering hedge funds an integrated front-to-back solution, improving trade workflows. The company’s collaboration with Coin Metrics empowered financial professionals to monitor digital assets, evaluate portfolios and stay aware of market trends.

FactSet’s second-quarter fiscal 2025 current ratio (a measure of liquidity) stood at 1.47, higher than the industry's average of 0.8. A current ratio of more than 1 suggests that the company will be able to pay off short-term debt easily.

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Risks Faced by FDS

The company has larger and stronger competitors who expand their offerings and data content more effectively, price their products more aggressively, or respond more swiftly to a dynamic marketplace to acquire and retain clients. Despite enjoying a technological advantage, pricing pressure continues to hurt FactSet, resulting in a lowering of the top line and a loss of market share.

FDS has improved through buyouts, but combined performance has often been below expectations due to the underestimation of inter-company revenues. With continuous acquisition as one of its growth strategies, it is anticipated to face integration issues in the future as well.

FactSet’s Zacks Rank & Stocks to Consider

The company has a Zacks Rank #3 (Hold) at present.

Some better-ranked stocks from the broader Zacks Business Services sector are Steelcase SCS and Limbach Holdings, Inc. LMB, each currently flaunting a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Steelcase has a long-term earnings growth expectation of 10%. SCS delivered a trailing four-quarter earnings surprise of 31.5%, on average.

Limbach Holdings has a long-term earnings growth expectation of 12%. LMB delivered a trailing four-quarter earnings surprise of 42.3%, on average.

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FactSet Research Systems Inc. (FDS) : Free Stock Analysis Report

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This article originally published on Zacks Investment Research (zacks.com).

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