FactSet Research Systems Inc. (FDS): A Bull Case Theory

We came across a bullish thesis on FactSet Research Systems Inc. (FDS) on Substack by Francesco Ferrari. In this article, we will summarize the bulls’ thesis on FDS. FactSet Research Systems Inc. (FDS)’s share was trading at $442.91 as of March 10^th. FDS’s trailing and forward P/E were 31.73 and 25.84 respectively according to Yahoo Finance.

A professional analyzing financial data on a modern computer monitor.

FactSet (FDS) is a financial data and analytics provider, delivering essential insights, research, and portfolio management tools to investors and institutions. The company boasts an exceptional business model, with over 98% of its revenue being recurring, ensuring a high degree of stability and predictability. This strong ARR foundation, combined with an 11.1% three-year revenue CAGR, underscores its consistent growth trajectory. FactSet’s financial resilience is further highlighted by its 54.3% gross margin and 24.1% free cash flow margin, demonstrating its ability to generate substantial profits while maintaining operational efficiency. With a three-year average return on invested capital (ROIC) of 16.1%, the company efficiently reinvests earnings to drive future expansion. Despite a net debt of $1.2 billion, FactSet maintains a healthy balance sheet, and its stock beta of 0.76 suggests lower volatility compared to the broader market. This financial robustness, coupled with its indispensable role in the investment and macroeconomic landscape, makes FactSet a standout company. As markets experience a pullback, investors should consider this stock as a potential investment by conducting thorough due diligence, given its stability, strong cash flow generation, and long-term growth potential.

FactSet Research Systems Inc. (FDS) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 36 hedge fund portfolios held FDS at the end of the third quarter which was 26 in the previous quarter. While we acknowledge the risk and potential of FDS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than FDS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None. This article was originally published at Insider Monkey.