FDS - FactSet: Fairly Valued But Still Caution Ahead Of Quarterly Results

2024-06-18 01:16:57 ET

Summary

• FactSet was overvalued in the last few years, but due to a slightly declining stock price and improving business, valuation multiples are more reasonable.
• Last quarterly results were still solid with top and bottom lines growing, but we see signs of growth slowing down.
• The looming recession and bear market as well as artificial intelligence are two threats to the business.
• FDS stock can be seen as fairly valued, but I would still not invest at this point.

One company (and especially stock) that was always too expensive in the last few years and therefore not a great investment was FactSet Research Systems Inc. ( FDS ). In my last article published in September 2022 I wrote:

FactSet also belongs to the category of great businesses with a wide economic moat that are just not available for the right price. While the business model is great, the stock is simply not a good investment as it is too expensive in my opinion.

Due to the extremely high valuation multiples, FactSet is faced with a high risk of multiple contraction in the next few quarters. And in combination with possibly lower earnings per share, FactSet's stock could easily be cut in half - like it has been following the Dotcom bubble and the Great Financial Crisis."

For further details see: