FactSet
FDS
$227.58
-2.04%
FactSet Research Systems (FactSet) is a leading provider of integrated financial data, analytics, and workflow solutions to the global investment community, operating within the Financial Data & Stock Exchanges industry. The company is a well-established, high-touch provider serving primarily buy-side clients, distinguishing itself through its aggregated data feeds and essential portfolio analytics software. The current investor narrative is dominated by a significant valuation derating and competitive pressures, as evidenced by the stock's sharp 47.7% one-year decline, with debates centering on the company's ability to maintain its relevance and growth trajectory against larger, more technologically aggressive peers and the broader integration of AI in financial workflows.…
FDS
FactSet
$227.58
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Investment Opinion: Should I buy FDS Today?
Rating: Hold. The core thesis is that FactSet is a high-quality business facing significant transitional challenges, with its deep valuation discount balanced by clear fundamental headwinds, making it appropriate for patient investors but not yet a compelling buy.
Supporting evidence includes a forward P/E of 11.54x, which prices in substantial earnings risk, and a trailing P/E of 23.71x that has compressed from recent highs. Revenue continues to grow at 7.07% YoY, and profitability remains robust with a 30.27% operating margin. The company's strong free cash flow generation ($682.9M TTM) and ROE of 27.31% provide financial resilience. However, the lack of a clear analyst price target consensus and the stock's 47.7% annual decline underscore the unresolved negative sentiment.
The thesis would upgrade to Buy if the forward P/E compressed further toward 10x alongside evidence of stabilizing margins above 22% and revenue growth re-accelerating above 8%. It would downgrade to Sell if revenue growth decelerates below 5% or net margin falls below 20%. Relative to its own history and the growth deceleration, the stock appears fairly valued to slightly undervalued, but not enough to overcome the near-term uncertainty.
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FDS 12-Month Price Forecast
The assessment is neutral based on a clash between compelling valuation and deteriorating growth momentum. The stock is not a falling knife given its cash flow strength, but it lacks a visible catalyst for a sustained re-rating. Confidence is medium because the key variables—quarterly revenue growth and net margin—are highly measurable in upcoming earnings reports. The stance would upgrade to bullish on evidence of sequential margin improvement and stable growth; it would turn bearish if the next quarter shows growth falling below 6% and margins dipping below 21%.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on FactSet's 12-month outlook, with a consensus price target around $295.85 and implied upside of +30.0% versus the current price.
Average Target
$295.85
6 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
6
covering this stock
Price Range
$182 - $296
Analyst target range
Analyst coverage for FactSet appears limited, with only 6 analysts providing estimates for revenue and EPS. The provided data lacks a consensus price target, Buy/Hold/Sell distribution, and target price range, indicating insufficient analyst coverage to gauge a clear consensus sentiment. This limited coverage is typical for a mid-cap financial services company and can lead to higher volatility and less efficient price discovery, as institutional interest may be more muted. The absence of a clear target range and recent rating actions (the institutional ratings data shows a series of 'Hold', 'Sector Perform', 'Underweight', and 'Sell' ratings with no recent upgrades) suggests a neutral-to-bearish institutional stance, with analysts likely awaiting clearer signs of a growth re-acceleration or successful competitive response before turning more positive.
Bulls vs Bears: FDS Investment Factors
The evidence currently tilts bearish, as the fundamental headwinds of decelerating growth (7.07% YoY) and emerging margin compression are concrete and driving the stock's severe derating. However, the bull case is supported by a compelling valuation disconnect (11.54x forward P/E) and exceptional cash generation ($682.9M TTM FCF), which provide a margin of safety. The single most important tension in the investment debate is whether FactSet's high profitability and cash flow can fund a successful competitive response and growth re-acceleration before its core business faces irreversible erosion from AI and larger rivals. The resolution of this tension will determine if the stock is a deep value opportunity or a value trap.
Bullish
- Deep Valuation Discount: The stock trades at a forward P/E of 11.54x, a 51% discount to its trailing P/E of 23.71x, indicating the market has priced in severe pessimism. This valuation is near the bottom of its historical range after a 47.7% one-year decline, suggesting limited downside if fundamentals stabilize.
- FactSet generates robust free cash flow, with TTM FCF of $682.9 million, supporting a strong ROE of 27.31%. This provides a financial moat for dividends, buybacks, and strategic investments without reliance on debt, as evidenced by a manageable debt-to-equity ratio of 0.71.
- High Profitability Margins: The company maintains superior profitability with a quarterly operating margin of 30.27% and a gross margin of 51.43%. These metrics, though down slightly from prior quarters, demonstrate a durable business model and pricing power within its niche.
- Technical Rebound Underway: The stock has gained 15.60% over the past month, showing strong relative strength against the market and suggesting a potential bottoming process. It currently trades 13.5% above its 52-week low of $185, indicating the most severe selling pressure may have abated.
Bearish
- Severe Growth Deceleration: Revenue growth has slowed to 7.07% YoY in the latest quarter, a deceleration from prior periods, signaling market share pressure and a maturing core business. The stock's 47.7% annual decline reflects investor concerns over its ability to re-accelerate growth against larger competitors.
- Margin Compression Emerging: Net margin contracted to 21.78% in Q2 2026 from 25.11% in the prior quarter, indicating rising competitive or investment pressures. This trend, if sustained, threatens the high-margin profile that has historically justified the stock's premium valuation.
- Competitive & AI Disruption Risk: The company faces intense competition from larger, more technologically aggressive peers and the broader integration of AI in financial workflows, as highlighted by recent 'AI-phobia' sector news. Its high-touch, aggregated data model may be vulnerable to technological disruption.
- Weak Analyst Sentiment & Coverage: Analyst coverage is limited (6 analysts) and institutional ratings show a series of 'Hold', 'Sector Perform', and 'Sell' stances with no recent upgrades. The lack of a clear bullish consensus and price targets suggests professional investors remain skeptical of a near-term turnaround.
FDS Technical Analysis
The stock is in a pronounced and sustained downtrend, having lost 47.65% over the past year and currently trading at $224.12, which is near the lower end of its 52-week range of $185 to $474.79. This positioning, approximately 13.5% above the 52-week low, suggests the stock is in deep value territory but also reflects severe bearish momentum and a potential 'falling knife' scenario, underscored by a maximum drawdown of -59.85%. Recent momentum shows a stark divergence, with the stock posting a strong 15.60% gain over the past month, sharply contrasting with its -21.82% loss over three months and the longer-term downtrend. This suggests a potential technical rebound or short-term mean reversion is underway, though it remains to be seen if this marks a durable trend reversal. Key technical levels are clearly defined, with major resistance at the 52-week high of $474.79 and immediate support at the 52-week low of $185. A sustained break below $185 would signal a continuation of the downtrend, while reclaiming the $290-$300 level would be a first step toward a recovery. The stock's beta of 0.724 indicates it has been significantly less volatile than the broader market (SPY) over the past year, which is unusual for a name with such a large price decline and suggests the sell-off has been more idiosyncratic and fundamental in nature.
Beta
0.72
0.72x market volatility
Max Drawdown
-59.9%
Largest decline past year
52-Week Range
$185-$475
Price range past year
Annual Return
-47.3%
Cumulative gain past year
| Period | FDS Return | S&P 500 |
|---|---|---|
| 1m | +4.9% | +10.5% |
| 3m | -10.5% | +3.9% |
| 6m | -14.7% | +5.4% |
| 1y | -47.3% | +29.6% |
| ytd | -20.1% | +5.4% |
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FDS Fundamental Analysis
Revenue growth remains positive but is decelerating, with the most recent quarterly revenue of $611.0 million representing a 7.07% year-over-year increase. However, this growth rate is a deceleration from the high single-digit to low double-digit rates seen in prior quarters, indicating potential market share pressures or a maturing core business. The Americas segment, contributing $396.2 million, remains the dominant revenue driver. Profitability metrics remain robust but show some pressure; the company reported net income of $133.1 million for the quarter with a gross margin of 51.43% and an operating margin of 30.27%. While still highly profitable, the quarterly net margin of 21.78% is down from 25.11% in the prior quarter, indicating some margin compression likely from increased investment or competitive pressures. The balance sheet and cash flow generation are key strengths. The company maintains a solid current ratio of 1.40 and a moderate debt-to-equity ratio of 0.71. Critically, it generates substantial free cash flow, with TTM FCF of $682.9 million, providing ample liquidity for dividends, share buybacks, and strategic investments without reliance on external financing, as evidenced by a strong ROE of 27.31%.
Quarterly Revenue
$611019000.0B
2026-02
Revenue YoY Growth
+0.07%
YoY Comparison
Gross Margin
+0.51%
Latest Quarter
Free Cash Flow
$682865000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is FDS Overvalued?
Given the company's consistent profitability with positive net income, the primary valuation metric is the Price-to-Earnings (P/E) ratio. FactSet's trailing P/E stands at 23.71x, while its forward P/E is significantly lower at 11.54x. This substantial gap implies the market has already priced in a sharp deceleration in earnings growth or anticipates a significant earnings decline in the coming year. Compared to industry averages, FactSet's trailing P/E of 23.71x and Price-to-Sales (P/S) of 6.10x likely represent a premium, though specific industry average data is not provided in the input. This premium would need to be justified by superior growth, profitability, or competitive moat, which is currently under scrutiny. Historically, the stock's own valuation has compressed dramatically from recent highs; for instance, its P/E ratio has fallen from over 30x in early 2025 to the current 23.71x. Trading near the lower end of its historical valuation range suggests the market has already priced in significant pessimism, presenting a potential value opportunity if the fundamental business proves more resilient than feared.
PE
23.7x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 15x~64x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
15.9x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks center on growth sustainability and margin preservation. Revenue growth has decelerated to 7.07% YoY, and net margin compressed by over 330 basis points quarter-over-quarter to 21.78%. While the balance sheet is solid (current ratio 1.40, D/E 0.71), the company's valuation premium relies on maintaining high profitability and mid-single-digit growth; further deceleration could trigger another leg down in the multiple. The business also has concentration risk, with over 80% of subscription value from buy-side clients, making it vulnerable to budget cuts in the investment management industry.
Market & Competitive Risks are heightened. The stock's trailing P/E of 23.71x and P/S of 6.10x likely represent a premium to industry averages, making it susceptible to valuation compression if growth fears persist. The primary external threat is competitive disruption from larger data providers (Bloomberg, Refinitiv) and the integration of AI, which could disintermediate traditional data aggregation services. The stock's low beta of 0.724 indicates its sell-off has been idiosyncratic, driven by these fundamental concerns rather than broad market moves, but it offers little protection if sector-wide 'AI-phobia' continues.
Worst-Case Scenario involves a failure to stem market share losses, leading to a growth stall (0-2% revenue growth) and sustained margin compression. This could trigger analyst downgrades and a derating to a deep-value multiple (e.g., forward P/E of 8-9x). The realistic downside would be a retest and break of the 52-week low of $185, representing a potential loss of approximately 17.5% from the current price of $224.12. In an extreme bear case echoing the maximum drawdown of -59.85%, the stock could fall toward the $150-$160 range if the business model is perceived as permanently impaired.
FAQ
The key risks, in order of severity, are: 1) Competitive & Technological Disruption: Larger rivals and AI integration threaten its aggregated data model, potentially leading to market share loss (evidenced by growth deceleration to 7.07%). 2) Financial Deterioration: Further margin compression from the current 21.78% net margin could erode the premium valuation. 3) Client Concentration: Over 80% reliance on buy-side clients makes revenue vulnerable to financial sector downturns. 4) Sentiment & Liquidity: Limited analyst coverage (6 analysts) and neutral-to-bearish ratings can lead to poor price discovery and heightened volatility.
The 12-month forecast presents three scenarios. The Base Case (60% probability) sees the stock trading between $240 and $300 as growth stabilizes around 6-7%. The Bull Case (25% probability) targets $320-$380 on successful execution and multiple expansion. The Bear Case (15% probability) warns of a drop to $185-$220 if growth stalls and margins compress further. The Base Case is most likely, anchored by the company's strong cash flow which provides a valuation floor, but the lack of a near-term growth catalyst limits significant upside.
FDS appears fairly valued to slightly undervalued based on a blended view. Its trailing P/E of 23.71x is likely at a premium to peers, but its forward P/E of 11.54x suggests the market expects a significant earnings decline, pricing in deep pessimism. Compared to its own historical multiples above 30x, the current valuation is at a deep discount. The market is paying a fair price for a business with decelerating growth but exceptional profitability and cash flow. The valuation implies the market expects low-single-digit growth to persist, making further multiple compression limited unless fundamentals worsen.
FDS presents a high-risk, potentially high-reward opportunity for specific investors. At a forward P/E of 11.54x, it is cheap relative to its history and cash flow, offering a 17.5% downside to its 52-week low. However, it is only a good buy for patient, value-focused investors who believe the company can stabilize its 7% growth rate and 21%+ net margins. For most investors, it is a 'Hold' until clearer signs of a fundamental turnaround emerge, given the competitive headwinds and lack of analyst bullish consensus.
FDS is unsuitable for short-term trading due to its low beta (0.724), which implies lower volatility, and the lack of a near-term catalyst. It is best suited for a long-term investment horizon of 3-5 years, allowing time for the company to navigate competitive threats and potentially regain growth momentum. The stock's 1.1% dividend yield and share buyback capacity (supported by $682.9M FCF) provide a return component while waiting. Investors should be prepared for potential volatility around earnings but commit to a multi-year holding period to realize the value opportunity.