FDS FactSet
A sticky data franchise priced for AI disruption; fairly valued unless growth re-accelerates.
The story
FactSet is a mature financial data and analytics platform whose sticky workstation seats, integrated content feeds, and switching costs give it a real but narrowing moat against Bloomberg, LSEG, S&P, and AI-native tools. It is late growth to early maturity: mid-single-digit organic ASV growth, high but slightly compressing margins as it pays for AI and data investment, and heavy buybacks funded by strong free cash flow. The market has de-rated it on fears that generative AI commoditizes data access and pricing power, which looks overstated but not absurd.
Growth of 5% fading to 3% is in line with recent organic ASV trends and below the 8% five-year CAGR, which was helped by the CUSIP acquisition. The margin settles at 32%, between the TTM 30.7% and the 33.5% peak, because AI spending offsets pricing power. Incremental sales-to-capital of 1.0 sits above the goodwill-heavy 0.69 average because organic growth is capital-light.
Value drivers
| Revenue growth (Y1) | 5.0% |
| Terminal growth | 3.0% |
| Forecast horizon | 8y |
| Target operating margin | 32.0% |
| Years to target margin | 3 |
| Sales-to-capital | 1.00 |
| Beta | 0.95 |
| Failure probability | 2.0% |
| Cost of capital (WACC) | 9.0% |
| Terminal WACC | 9.1% |
Valuation bridge
| PV of explicit FCFF | 3.62B |
| PV of terminal value | 5.98B |
| Equity value | 8.41B |
| ÷ shares → per share | $236.33 |
News
neutral +0.15 · 8 articles
- ETF League Tables: PIMCO Gathers $132M
- BlackBerry Lifts Full-Year Outlook as Software Solutions Unit Drives Second-Quarter Growth
- FDS Stock Jumps 29.1% in 3 Months: Here's What You Should Know
- Darden Misses First-Quarter Revenue Views, Maintains Full-Year Outlook
- How FactSet’s Mixed Earnings Setup Could Reframe Operating Momentum for FactSet Research Systems (FDS) Investors
- Companies Beat Earnings 75.9% of the Time. Analysts Predicted 43.9%. Betting Against Them Would Have Won
- ETF League Tables: First Trust Outflows Total $3.6B
- Paychex Reports In-Line First-Quarter Revenue, Affirms Full-Year Outlook
Projected free cash flow to the firm
| Yr | Revenue | Growth | Margin | NOPAT | Reinvest | FCFF | PV |
|---|---|---|---|---|---|---|---|
| 1 | 2.56B | 5.0% | 31.1% | 659.46M | 121.92M | 537.54M | 493.38M |
| 2 | 2.68B | 4.7% | 31.6% | 700.52M | 120.70M | 579.81M | 488.46M |
| 3 | 2.80B | 4.4% | 32.0% | 741.95M | 118.73M | 623.21M | 481.90M |
| 4 | 2.92B | 4.1% | 32.0% | 772.69M | 115.99M | 656.69M | 466.07M |
| 5 | 3.03B | 3.9% | 32.0% | 802.49M | 112.47M | 690.02M | 449.50M |
| 6 | 3.14B | 3.6% | 32.0% | 831.15M | 108.15M | 723.00M | 432.29M |
| 7 | 3.24B | 3.3% | 32.0% | 858.46M | 103.05M | 755.40M | 414.56M |
| 8 | 3.34B | 3.0% | 32.0% | 884.21M | 97.18M | 787.03M | 396.43M |
Key risks
- Generative AI and LLM-native tools erode the value of the workstation and pricing power
- Buy-side seat cuts and fee pressure from asset management consolidation
- Competition from Bloomberg, LSEG, and S&P squeezes wealth and banking wins
Catalysts
- AI features such as Mercury and conversational analytics driving ASV acceleration and price increases
- Continued buybacks at a de-rated multiple lifting per-share value