The past six months have been a windfall for FactSet’s shareholders. The company’s stock price has jumped 53.2%, setting a new 52-week high of $343.93 per share. This performance may have investors wondering how to approach the situation.
Is now the time to buy FactSet, or should you be careful about including it in your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free.
Why is FactSet not exciting?
We’re glad investors have benefited from the price increase, but we’re passing on FactSet for now. Here are two reasons why FDS doesn’t excite us, plus one stock we’d rather own.
1. Lackluster revenue growth
Long-term growth is the most important, but within financials, a stretched historical view may miss recent interest rate changes and market returns. FactSet’s recent performance shows its demand has slowed as its annualized revenue growth of 6% over the last two years was below its five-year trend. We’re wary when companies in the sector see decelerations in revenue growth, as it could signal changing consumer tastes aided by low switching costs. 
2. EPS barely growing
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
FactSet’s unimpressive 10% annual EPS growth over the last five years aligns with its revenue performance. This tells us it maintained its per-share profitability as it expanded.
Final judgment
FactSet isn’t a terrible business, but it doesn’t pass our quality test. Following the recent surge, the stock trades at 16.8× forward P/E (or $343.93 per share). Beauty is in the eye of the beholder, but we don’t really see a big opportunity at the moment. We’re pretty confident there are more exciting stocks to buy at the moment. Let us point you toward the most dominant software business in the world.
Stocks we like more than FactSet
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