I'm a big fan of FactSet Research Systems (FDS). The stock was on my Buy List for a few years but I decided to ditch it after 2009.
I often tell investors not to worry about stocks you used to own after you sell it. I'm going to break that rule for a moment because I'd love to add it back to the Buy List.
Unfortunately, FDS had a very good 2010 so it was a bad move on my part. But I truly thought the shares were too expensive and I've been waiting for a pullback ever since.
Today, the company reported earnings and the results matched what the company told us to expect. The guidance for the current quarter, however, did not impress Wall Street.
FactSet Research Systems Inc.'s fiscal third-quarter earnings rose 12%, at the high end of the company's estimates, amid continued growth in revenue and customers.
The board of the provider of data and services to investment managers authorized a $200 million expansion of FactSet's buyback program, bringing the total to $226 million. The company recently had a market capitalization of about $4.8 billion.
FactSet has posted steady growth in recent quarters as the financial industry continues to recover. The company's customer base grew by 800 to 45,600 in the quarter, while client count rose to 2,187, up 26.
For the quarter ended May 31, FactSet reported a profit of $43.3 million, or 92 cents a share, up from $38.7 million, or 81 cents a share, a year earlier. Revenue jumped 15% to $183.6 million.
The company in March had projected 90 cents to 92 cents a share, topping estimates at the time, on revenue of $181 million to $184 million.
Operating margin fell to 33.7% from 34.7%.
For the current quarter, FactSet projected per-share earnings of 93 cents to 95 cents on revenue of $187 million and $191 million. Analysts polled by Thomson Reuters most recently expected 95 cents and $190 million, respectively.
Uh oh! You can't say 93 to 95 cents per share when the Street expects 95 cents.
This is a great example of how investing works. If you give people a reason to sell, even if it's not a great reason, they'll take it — and that's what's happening to FDS today.
FactSet is a great company and I'm keeping a close eye on it. But it will have to come down a lot for me to be interested in adding it back to the Buy List.
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