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Here’s Why Investors Should Hold FactSet (FDS) Stock Now


FactSet Research Systems Inc. FDS has made a remarkable run in the last six months. The stock has returned 32.3% during the said time frame, significantly outperforming the industry's gain of 14.2%.

With expected long-term earnings per share growth rate of 11% and a market cap of $8.2 billion seems to be a stock that investors need to hold on to if they are looking to reap long-term gains.

Let’s delve deeper to look at the factors influencing the company’s performance.

FactSet, a provider of global online integrated data-related products and services for the investment community regularly enhances product portfolio to address the requirements of the industry it caters to.

Additionally, its strategy of expanding through acquisitions is praiseworthy. The company’s most noticeable acquisitions include the buyout of BISAM, IDMS, Portware LLC, Code Red, Revere Data LLC, StreetAccount, to name some.

We believe, the enrichment of the offerings via innovations and acquisitions has assisted the company in expanding clientele as well as global footprint. The addition of 65 clients in first-quarter fiscal 2018 which took the tally to 4809 is a testament to the fact. The company’s Annual Subscription Value (“ASV”) increased to $1.32 billion as of Nov 30, 2017, up 12.8% from the year-ago quarter figure of $1.17 billion.

However, a declining client retention ratio is a major concern. The company’s client retention ratio in the first quarter was 90%, tanking 300 basis points (bps) from the year-ago quarter and 100 bps from the previous quarter. This remain a concern over the company’s top-line growth in near-term.

Additionally, the industry being a highly competitive one with the likes of players such as Bloomberg L.P., Thomson Reuters Inc. and S&P Global Inc. SPGI, FactSet continues to face strong headwinds.

Zacks Rank and Stocks to Consider

FactSet carries a Zacks Rank #3 (Hold).

Some of the better-ranked stocks in the same industry space are IHS Markit Ltd. INFO and Dun & Bradstreet Corporation DNB both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term expected EPS growth rate for IHS Markit is projected to be 11.64% and 4.50%, respectively.

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