FactSet Research Systems Inc (FDS, Financial) has demonstrated a daily gain of 2.31%, with a 0.76% increase over the last three months. The company's Earnings Per Share (EPS) stands at 13.05. But is the stock fairly valued? This article aims to provide a comprehensive analysis of FactSet Research Systems Inc (FDS) to answer this question. Let's delve into the details.
Introduction to FactSet Research Systems
FactSet Research Systems Inc is a leading provider of financial data and portfolio analytics to the global investment community. The company aggregates data from various sources into its workstations, providing essential portfolio analytics that companies use to monitor portfolios and address reporting requirements. FactSet Research Systems has a market cap of $16.50 billion and sales of $2 billion. The company's stock price stands at $433.57, and its GF Value, an estimation of fair value, is $472.08.
Understanding the GF Value of FactSet Research Systems
The GF Value of a stock represents its current intrinsic value, derived from historical trading multiples, a GuruFocus adjustment factor based on the company's past performance and growth, and future business performance estimates. The GF Value Line provides an overview of the stock's fair trading value. If the stock price is significantly above the GF Value Line, it indicates overvaluation, leading to potentially poor future returns. Conversely, if it is significantly below the GF Value Line, the stock may be undervalued, hinting at higher future returns.
Based on our analysis, FactSet Research Systems (FDS, Financial) appears to be fairly valued. Its current price of $433.57 per share aligns closely with the GF Value estimation. As such, the long-term return of FactSet Research Systems' stock is likely to be close to its business growth rate.
Financial Strength of FactSet Research Systems
Companies with poor financial strength pose a high risk of permanent capital loss. Therefore, an investor must review a company's financial strength before purchasing shares. FactSet Research Systems has a cash-to-debt ratio of 0.27, which ranks lower than 82.94% of 756 companies in the Capital Markets industry. However, the overall financial strength of FactSet Research Systems is 6 out of 10, indicating fair financial health.
Profitability and Growth of FactSet Research Systems
FactSet Research Systems has been consistently profitable over the past ten years, reducing risk for potential investors. The company's profitability is strong, with an operating margin of 31.61%, ranking better than 71.56% of 647 companies in the Capital Markets industry.
However, FactSet Research Systems's growth ranks lower than 59.7% of 469 companies in the Capital Markets industry. The company's 3-year average revenue growth rate is better than 54.17% of 683 companies in the Capital Markets industry, but its 3-year average EBITDA growth rate is 6.6%, ranking lower than 59.7% of 469 companies in the Capital Markets industry.
ROIC vs. WACC
Comparing a company's return on invested capital (ROIC) and the weighted cost of capital (WACC) provides another perspective on its profitability. FactSet Research Systems's ROIC of 16.21 is higher than its WACC of 9.43, indicating effective cash flow generation relative to the capital invested in its business.
Conclusion
Overall, FactSet Research Systems (FDS, Financial) stock appears to be fairly valued. The company exhibits fair financial strength and strong profitability. However, its growth ranks lower than most companies in the Capital Markets industry. To learn more about FactSet Research Systems stock, check out its 30-Year Financials here.
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