FactSet (FDS) Attains New 52-Week High: Here Is Why

Shares of FactSet Research Systems Inc. (NYSE:FDS) scaled a new 52-week high of $179.28 yesterday, before eventually closing at $177.39.

FactSet’s shares have been gaining solid momentum since Jun 28, when the company reported strong third-quarter fiscal 2016 results. Since then, the stock has gained over 17%.

FactSet’s third-quarter earnings surpassed the Zacks Consensus Estimate whereas the top line was almost in line with the same. The year-over-year comparisons were favorable on both the counts as well. Moreover, the company has a high client retention ratio. Also, the Annual Subscription Value (ASV) increased year over year, enabling the company to add a substantial number of clients to its portfolio.

FactSet’s shares got another major boost when it announced an accelerated share repurchase program worth $120 million with Bank of America (NYSE:BAC) on Jul 5. Notably, FactSet has been committed to maximize shareholders’ wealth. In fiscal 2015, the company spent $256.2 million on share repurchases and distributed $66.6 million as dividends.

Keeping with this strategy, FactSet returned approximately $192.8 million through share repurchases and paid $54 million as dividends during the first three quarters of fiscal 2016. Such shareholder-friendly initiatives not only boost investor confidence in the stock but also drive bottom-line growth.

FactSet’s persistent focus on product innovation across segments, with an emphasis on financial services to expand the customer base, has helped the company stay afloat amid the current macroeconomic challenges.

Furthermore, the company is witnessing growth in ASV due to robust client additions. We believe that a growing customer base, high client retention rate (95% of ASV) and a competitive pricing strategy will boost revenues over the long haul.

Going forward, regular share buybacks will support the bottom line and boost shareholders’ value.

On the flip side, competition from the likes of Bloomberg, Dow Jones & Company Inc., MSCI Inc. (NYSE:MSCI) and Thomson Reuters (TO:TRI) , all of which are launching products at competitive prices, is a significant headwind for FactSet.

Currently, FactSet carries a Zacks Rank #3 (Hold).