FactSet Research Systems Inc (FDS, Financial) has experienced a daily loss of 4.22% and a three-month decline of 10.63%, with an Earnings Per Share (EPS) of 12.63. Investors may question whether this performance indicates that the stock is modestly undervalued. The following analysis will explore FactSet Research Systems' valuation to provide an answer.
Company Introduction
FactSet Research Systems Inc (FDS, Financial) is a leading provider of financial data and portfolio analytics to the global investment community. The company sources data from a variety of contributors and offers vital analytics used for portfolio monitoring and reporting. FactSet Research Systems primarily serves buy-side clients, comprising 82% of its annual subscription value. The company has expanded its capabilities through strategic acquisitions like Portware and BISAM. As of April 24, 2024, FactSet Research Systems' stock price stands at $419.94, with a GF Value of $483.56, suggesting a potential undervaluation.
Summarize GF Value
The GF Value is an exclusive measure that reflects the intrinsic value of a stock based on historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. FactSet Research Systems (FDS, Financial) appears modestly undervalued according to this valuation method. The stock's current price of $419.94 is below the GF Value line, indicating a potential for higher future returns due to its current undervaluation.
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Financial Strength
When considering an investment, the financial strength of a company is crucial. FactSet Research Systems has a cash-to-debt ratio of 0.26, which is lower than the majority of its industry peers. With a financial strength rating of 6 out of 10, FactSet Research Systems is considered to have a fair level of financial stability.
Profitability and Growth
A company's profitability is a key indicator of investment safety. FactSet Research Systems has maintained profitability over the last decade, with a strong operating margin of 31.81% that stands out in the Capital Markets industry. The company's profitability rank is a robust 10 out of 10.
Growth is also a vital factor in valuation. FactSet Research Systems' average annual revenue growth is 11.5%, which is competitive within its industry. The company's 3-year average EBITDA growth rate is 13.3%, showcasing its ability to expand profitably.
ROIC vs WACC
Comparing Return on Invested Capital (ROIC) with the Weighted Average Cost of Capital (WACC) is essential to assess a company's profitability. FactSet Research Systems' ROIC of 15.94% over the past 12 months surpasses its WACC of 9.04%, indicating value creation for shareholders.
Conclusion
In summary, FactSet Research Systems (FDS, Financial) is currently positioned as modestly undervalued. The company exhibits a fair financial condition, strong profitability, and commendable growth, outperforming more than half of its industry counterparts. For a deeper dive into FactSet Research Systems' financials, investors can explore its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
