Over the last six months, FactSet’s shares have sunk to $371.01, producing a disappointing 16.2% loss - a stark contrast to the S&P 500’s 15.5% gain. This may have investors wondering how to approach the situation.
Is now the time to buy FactSet, or should you be careful about including it in your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free.
Why Is FactSet Not Exciting?
Even with the cheaper entry price, we don't have much confidence in FactSet. Here are two reasons we avoid FDS and a stock we'd rather own.
1. Lackluster Revenue Growth
Long-term growth is the most important, but within financials, a stretched historical view may miss recent interest rate changes and market returns. FactSet’s recent performance shows its demand has slowed as its annualized revenue growth of 5.6% over the last two years was below its five-year trend. 
Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.
2. Recent EPS Growth Below Our Standards
Although long-term earnings trends give us the big picture, we like to analyze EPS over a shorter period to see if we are missing a change in the business.
FactSet’s unimpressive 6.4% annual EPS growth over the last two years aligns with its revenue trend. This tells us it maintained its per-share profitability as it expanded.
Final Judgment
FactSet isn’t a terrible business, but it doesn’t pass our bar. After the recent drawdown, the stock trades at 20.8× forward P/E (or $371.01 per share). Beauty is in the eye of the beholder, but our analysis shows the upside isn’t great compared to the potential downside. We're fairly confident there are better investments elsewhere. Let us point you toward the Amazon and PayPal of Latin America.
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