FactSet Research Systems: Financial information for the business community

When businesses need high volumes of precise financial information, they often turn to a specialist headquartered in Norwalk, Connecticut.

FactSet Research Systems (NYSE: FDS) provides economic and financial information on tens of thousands of companies worldwide. The firm offers data from hundreds of databases, focusing on such areas as broker research, financial summaries and newswires. The company also provides software for use in downloading, manipulating and presenting financial data for investment analysis. Clients include investment managers, bankers, lawyers and corporations at all levels. The firm employs over 1,000 people in North America, Europe and the Pacific Rim.

FactSet pleased investors earlier in the week, when it reported fiscal Q3 EPS of $0.52 (ex-items) and revenues of $121.1 million. Analysts had been looking for $0.51 and $120.4 million. Management also predicted Q4 revenues of $126-$130 million, versus Street consensus of $125.11 million. Friedman Billings subsequently reiterated its "outperform" recommendation and boosted its price target to $80.

The stock popped into the initial stage of a bullish "pennant" consolidation pattern on the news. Prices frequently exit pennants moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.

Altogether, brokers recommend FDS with two "strong buys," two "buys" and four "holds." Analysts expect a 19% average annual growth rate, through the next five years. The FDS Price to Free Cash Flow ratio (37.00), Operating Margin (32.27%), Net Profit Margin (22.66%), Return on Assets (21.54%), Return on Investment (25.62%) and Return on Equity (26.96%) compare favorably with industry, sector and S&P 500 averages.

Institutional investors hold about 81% of the outstanding shares. The stock is one of those used to calculate the S&P 600 SmallCap Index. Over the past 52 weeks, it has traded between $42.30 and $70.86. A stop-loss of $60.50 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.