It's a fact that FactSet looks cheap!
Valuation of FDS
Everyone in the finance industry knows the Bloomberg Terminal. FactSet is a smaller competitor. These can be fantastic businesses due to their sticky recurring revenues. And the market knows this, and so they usually trade at high multiples. Earnings misses, contraction in margin versus prior guidance, and investment initiatives have hurt the story. This presents a potential opportunity for long-term investors.
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According to Oriel, Bloomberg has a 33.4% market share. It’s the 800-pound gorilla! But there are other financial data platforms too! There is Capital IQ with a 6.2% share, FactSet with a 4.5% share, and Refinitiv Eikon that has 19.6% share. Each has its own strengths and weaknesses. I’ve used Bloomberg for many years, and honestly, I cringe every time I see some ad about the next Bloomberg killer. It’s a very strong tool.
But Bloomberg is like using a Ferrari. Do you need it to race against a bicycle? For example, if someone is only doing equities, then the cheaper solutions are probably enough. For example, I’ve used Capital IQ and I think it’s fantastic. I’ve also used Eikon. FactSet is the only one I haven’t used, but I do know a few professionals who do use it, and it’s an integral part of their process.
The data is scrubbed and vastly superior to cheaper alternatives. There are numerous features such as number see-through, and Excel APIs. These features save managers and analysts a significant amount of time. This isn’t a joke. Once all the features are integrated into a manager’s processes and models, it’s not easy to switch. There are important nuances built in that make switching harder. You can’t just go from FactSet to Capital IQ without reading, analysing, and understanding the alternative data point. It simply may not be the same thing. It’s no coincidence that FDS has 90% client retention. These subscriptions are sticky, which is why I like such companies. From 2016-25, clients have grown at a 9% CAGR, while users at 12%.
Market Info
Ticker: FDS
Stock Price (Local): $283.95
52-W High (November-14-2024): $499.87
52-W Low (October-06-2025): $272.50
5 Year Beta: 0.79
Avg Volume (3-month, millions): 0.6
Avg Volume (USD, millions): 169.0
Shares outstanding (basic, millions): 38
Country of Incorporation: United States
Trading Currency: USD
Enterprise Value
Market Cap (USD, millions): 10,735
Plus: Total Debt: 1,559 of which Leases 209
Less: Cash and ST Investments: -355
EV (USD, millions): 11,939
Key Valuation Metrics
P/E forward: 16x
EV/EBITDA forward: 13x
Dividend Yield: 1.5%
Key Persons
Phil Snow, who spent 30 years with FactSet, retired. The company hired Saonoke Viswanathan, who is a 15-year veteran of JPMorgan Chase, started in September 2025.
Board of Directors, Chairman: Frank, Malcolm
CEO: Sanoke Viswanathan
Executive VP & CFO: Shan, Helen
Executive VP & CTO: Stepp, Katherine
Executive VP & Chief People Officer: Harding, Catrina
Top 5 Institutional holders
The Vanguard Group: 13%
BlackRock: 9%
Baron Capital Group: 6%
State Street Global Advisors: 5%
Loomis Sayles & Company: 4%
Stock Performance
If you bought the stock at any time over the last 5 years, then you lost money!
But EPS has been rising at a 9% CAGR over the last 5 years. If we look 10 years out, then we see EPS has still risen more than the stock (11% vs 6%).
Peers
The company’s largest competitors based on products and services are: Bloomberg, S&P’s Global (Market Intelligence), the London Stock Exchange (its Data Analytics division), BlackRock (Aladdin platform), MSCI, and Morningstar. From the charts, Bloomberg is not included as it’s private, and BlackRock, because Aladdin is a small part of the business.
As we see below, the stock is trading at a discount to its peers based on P/E and EV/EBIT.
The company also has good margins and return on equity.
Historically, the ROE has been strong.
The stock has declined the most over the past year.
Consensus estimates for forward growth is a little weaker than peers but does that justify the discount?
Historical multiple
Below, we see that the stock is trading at a discount to historical forward P/E. Not shown, but EV/EBIT is similar.
DCF
FactSet’s revenue comes from charging professionals a subscription fee to access its financial data and tools. Consensus estimates for this revenue are at 5% for the next 2 years which is at mid guidance (see further below). I use the same going forward. This is lower than the historical CAGR of 9% (both the last 10 years and 5 years). Similarly used a constant 35% margin.
Here is the company guidance:
My DCF gave me an intrinsic value of $364 or c. 30% higher than the current stock price.
Alternatively, the company generated $617m in free cash flow. Let’s drop that to $600m and assume a perpetuity at a 4% growth and 8.6% WACC. Intrinsic value is $329 - still upside!
So the company is trading at reasonable multiples for the business and looks cheap based on cash flow. I think I’m going to have to do a trial of the product as part of my due diligence. I’ll definitely be doing more work on this one.
Let me know what you think in the comments!
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