Hook / Thesis
FactSet (FDS) is not a flashy AI darling, but the stock is cheap relative to the earnings run-rate and the optionality around modest revenue acceleration. The company reported 11/30/2025 quarter results (filed 01/05/2026) showing revenue of $607.6M and diluted EPS of $4.51 for that quarter. Stack the last four quarters and FactSet is running roughly $2.33B in revenue and roughly $15.7 of diluted EPS on a trailing twelve-month basis - implying a trailing P/E in the high teens at the current price. For a subscription/analytics business with durable buy-side relationships, steady cash generation and a growing dividend, that looks cheap.
Why the market should care
FactSet aggregates financial data and portfolio analytics used by the global investment community; buy-side clients account for over 80% of subscription value. That gives it a high-retention, recurring revenue base and visibility that many software businesses lack. The most recent quarter (period 09/01/2025 - 11/30/2025, filed 01/05/2026) produced revenue of $607.621M and operating income of $192.071M, producing net income attributable to the parent of $152.58M. Those numbers show sequential and year-over-year strength versus earlier quarters in the dataset and, importantly, generate cash: net cash flow from operating activities in that quarter was $121.284M.
Business snapshot - what the numbers say
- TTM revenue estimate (sum of the most recent four quarters in the dataset): approximately $2.33B (607.621 + 585.520 + 570.660 + 568.667 = $2,332.468M).
- TTM net income (sum of the same four quarters): approximately $596M (152.58 + 148.542 + 144.86 + 150.022 = $596.004M).
- TTM diluted EPS (sum of quarterly diluted EPS in those periods): ~ $15.68 (4.51 + 3.87 + 3.76 + 3.89 = 15.73; minor rounding differences across filings give ~15.7 EPS).
- Balance sheet (most recent filing 01/05/2026): total assets $4.2208B, equity $2.1679B, long-term debt $1.3687B - manageable leverage for a cash-generative software/data business.
- Cash flow: the company consistently generates operating cash flow in the high tens to low hundreds of millions per quarter (examples: $121.284M in the latest quarter; prior quarters of $253.833M and $173.955M in earlier filings).
- Dividend: quarterly payout most recently $1.10 declared 11/03/2025 (pay date 12/18/2025). That annualizes to roughly $4.40 and gives an approximate yield of 1.5% at a $291.77 price (prev close 01/14/2026).
Valuation framing
The stock closed (prev day snapshot) at $291.77 on 01/14/2026. Using the TTM diluted EPS ~ $15.7 gives a trailing P/E of about 18.6 (291.77 / 15.7 ≈ 18.6). For a recurring-revenue data and analytics provider with stable margins and free cash flow, a P/E in the high teens is reasonable and arguably conservative, especially vs. the company’s historical price range (the 52-week and multi-quarter price history in the dataset shows prior trading levels as high as the $460s). If FactSet can sustain modest revenue acceleration and margin stability, even modest multiple expansion to the low-20s would move the stock materially higher.
Two valuation lenses to keep in mind:
- Operating reality: the business produces both predictable revenue and strong operating cash flow (examples above). That reduces execution risk relative to growth companies that are not cash-flow positive.
- Optionality: FactSet has made targeted acquisitions historically (Portware, BISAM, CUSIP Global Services). Integration of those assets and cross-selling into a large buy-side base can lift revenue per client over time without proportionate increases in sales & marketing spend.
Trade idea (actionable)
Recommendation: Long FDS - initiate a position in the $280 - $300 zone. The chart and recent volatility imply the market is pricing legacy-growth risk; we see a favorable asymmetric trade conditioned on signs of continued revenue strength.
Size and stops (example sizing guidance, adapt to your risk tolerance):
- Entry: build position 280 - 300 (current reference price 291.77 on 01/14/2026).
- Initial stop: 255 (roughly 12-13% below the entry midpoint). A break below 255 signals a deeper re-pricing and likely multiple compression or evidence of revenue deceleration.
- Targets:
- Target 1 (near-term, 3-6 months): 340 — reflects modest multiple expansion to ~21x on steady EPS and mean reversion from recent weakness.
- Target 2 (medium, 6-12 months): 380 — assumes sustained revenue acceleration and margin upside; implies P/E ~24 on unchanged EPS, or EPS growth to ~16.0-16.5 with multiple expansion to the low-20s.
- Target 3 (stretch, 12+ months): 460 — consistent with a return toward historical highs if FactSet converts its recurring revenue and acquisitions into above-market growth and the overall market assigns a mid-20s multiple.
Risk/reward math (rough): entry 290, stop 255 (-12%), Target 1 340 (+17%), Target 2 380 (+31%). The first target provides an early profit-taking point while the stop limits downside.
Catalysts to monitor
- Next earnings prints: continued top-line acceleration and stable margins. The most recent quarter (reported 01/05/2026) beat revenue estimates very slightly ($607.621M vs est. $606.458M) and that kind of delivery matters for sentiment.
- Client adoption in Asia-Pacific and international markets - the company flagged a 2025 APAC Buy-Side Forum in the dataset (10/15/2025 news). Improved growth contributions from APAC would validate the expansion story.
- Successful monetization and cross-sell of CUSIP Global Services and earlier acquisitions that expand FactSet’s addressable market.
- Capital allocation signals - continued buybacks or a dividend increase. Financing cash flow in recent quarters has been negative (e.g., net cash flow from financing activities -$190.512M in the most recent filing), implying share repurchases or cash return to shareholders, which supports multiples.
Risks and counterarguments
- Slower-than-expected buy-side budgets - FactSet’s revenue is heavily weighted to the buy-side. If industry-wide spending stalls, recurring revenue growth could decelerate and earnings would fall short of the assumptions underpinning the trade.
- Competition and pricing pressure - data and analytics is competitive. Larger platform players or lower-cost entrants could compress FactSet’s price realization or force higher reinvestment to defend share.
- Integration execution risk - the thesis relies in part on extracting more revenue from acquired assets (CUSIP, Portware, BISAM). Failure to integrate or cross-sell would reduce upside.
- Multiple compression - even if earnings hold, market sentiment could keep multiples depressed. The stock is sensitive to macro moves and rotation away from ‘slower growth, higher cash flow’ names could keep valuations stuck.
- Counterargument: the market may already be fairly valuing FactSet given secular pressure on data budgets. A trailing P/E near 18.6 might be appropriate if incremental growth proves hard to deliver. If you believe the buy-side is aggressively trimming external data spend, this is less of a value trade and more of a value trap.
What would change my mind
I would downgrade this trade if future quarterly filings show any of the following: (a) sequential revenue declines or pronounced churn among buy-side clients, (b) margin erosion from higher-than-expected investment or price competition, (c) operating cash flow materially below the recent multi-quarter pattern, or (d) clear signs that acquisitions are not accretive (falling revenue contribution or heavy one-time integration charges). Conversely, a clear acceleration in revenue growth, higher recurring revenue per client and a meaningful increase in free cash flow would strengthen the bull case and meriting a larger position.
Bottom line
FactSet is a cash-generative, subscription-driven business with a conservative balance sheet, an active dividend policy and consistent profitability. The company’s most recent quarter (period ending 11/30/2025, filed 01/05/2026) delivered revenue of $607.6M and EPS that keeps the TTM EPS around $15.7. At a mid-$290s price the trailing P/E sits in the high teens. That combination - visible recurring revenue and a reasonable multiple - creates an asymmetric opportunity for patient traders to buy weakness on the thesis that modest revenue acceleration and continued cash returns push the stock higher. Recommended trade: long in the $280-$300 zone, stop 255, targets 340 / 380 / 460. Manage position sizing and re-evaluate after the next two earnings releases.