Thursday, April 25, 2013

Factset Research Systems (FDS) 2013 Review


FactSet Research (FDS) supplies financial and economic data to the global investment community through 1600 databases with information along with powerful analytics on tens of thousands of companies, multiple stock markets and governments. The company earns a 25%+ return on equity and has grown earnings and dividends 20-25% over the last ten years. FDS should continue its above average performance as a result of:

(1) its portfolio analytics system is the industry leader; because of its extensive product development and strong client relationships, FDS has not only created a high barrier to entry but is also increasing its market share,

(2) its ability to sell additional products to existing customers such as coverage of corporate bonds and fixed income derivative securities as well as products for investment banking, plan sponsors and corporate finance,

(3) acquisitions.

Negatives:

(1)    it is in a highly competitive industry,

(2) the risk of a shrinking ‘soft dollar’ [means of payment] pool.

FDS is rated A+ by Value Line, has no debt, and its stock yields 1.3%.

   Statistical Summary

                 Stock      Dividend         Payout      # Increases  
                Yield      Growth Rate     Ratio        Since 2003

FDS           1.3%           8%               27              10
Ind Ave      2.0*            8                  34              NA 

                 Debt/                         EPS Down       Net        Value Line
                 Equity         ROE      Since 2003     Margin       Rating

FDS            0%             30%            0                 24%          A+
Ind Ave      39               22              NA               15            NA

*many companies in FDS industry do not pay a dividend
  
     Chart

Note: FDS stock made good initial progress off its November 2008 low, quickly surpassing the November 2008 trading high (green line) but taking longer to successfully challenge the downtrend off its October 2007 high (straight red line).  Long term, FDS is in an uptrend (blue lines).  Intermediate term it is in a trading range (purple lines).  The wiggly red line is the 50 day moving average.  The Aggressive Growth Portfolio owns an 85% position in FDS.  The upper boundary of its Buy Value Range is $71; the lower boundary of its Sell Half Range is $138.


           
   
4/13

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