FACTSET RESEARCH SYSTEMS INC. (FDS): what the price requires
At today's price, FACTSET RESEARCH SYSTEMS INC. (FDS) is priced for -1.5% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/FDS
Headline
| Field | Value |
|---|---|
| Ticker | FDS |
| Company | FACTSET RESEARCH SYSTEMS INC. |
| Current price | $260.72/sh |
| Composition | Americas 65% / EMEA 25% / Asia Pacific 10% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 7.6% |
| Operating margin today | 31.9% |
| Margin compression implied | -24.3pp |
| Implied growth | -1.5% |
| Multiple paid | 14x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 8% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~6.3pp.
Reconcile: at the x-ray's 9.3% required return this reads ~6%/yr; the models below use their own rates.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -1.62σ |
| cohort percentile (of 177 peers) | 19 |
| implied end-window share | 0% |
Valuation X-Ray
The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.52x | 5 | expensive |
| Earnings | 1.58x | 5 | expensive |
| Relative | 0.52x | 5 | justifies |
| Growth | 0.76x | 3 | justifies |
Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.1%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $518.80 | 0.50x | yes | FCF base $0.7B, growth 7% (input: historical growth), terminal g 4.0%, WACC 8.1%, 6yr projection |
| DCF Exit Multiple | Growth | $345.15 | 0.76x | yes | Exit EV/EBITDA: 11.1x / 13.1x / 15.1x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $497.65 | 0.52x | yes | P/E 27.58x (blended: static sector reference 35x + trailing (TTM) 16x), scenarios: 23.0x / 27.6x / 32.2x (bear / base = reference held flat / bull), EV/EBITDA 25x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $171.45 | 1.52x | yes | BV/sh $57.45, ROE (TTM) 27.6%, ke 9.3% |
| Two-Stage Excess Return | Asset | $301.52 | 0.86x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $231.82 | 1.12x | yes | Rev $2.4B, growth 7% (input: historical growth; tapered), Terminal P/S: 3.4x / 4.0x / 4.7x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $262.14 | 0.99x | yes | EPS $15.55, growth 17% (input: historical EPS growth), PEG=0.98 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $162.13 | 1.61x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.65B × (1−17%) / WACC 8.1% → EPV (no growth) |
| Residual Income | Asset | $257.96 | 1.01x | yes | BV $57.45 + 5yr PV of (ROE (TTM) 27.6% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $141.77 | 1.84x | yes | √(22.5 × EPS $15.55 × BVPS $57.45) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $529.46 | 0.49x | yes | EBITDA $0.84B × sector EV/EBITDA 25.0x |
| FCF Yield | Earnings | $164.50 | 1.58x | yes | FCF $682.9M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $143.96 | 1.81x | yes | SBC-adj FCF $0.61B (FCF $0.68B − SBC $0.07B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $501.75 | 0.52x | yes | EPS $15.55 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $31.87 | 8.18x | yes | BV $57.45 × (ROIC 4.5% / WACC 8.1%) |
| P/Sales Sector | Relative | $518.27 | 0.50x | yes | Revenue $2.40B × sector P/S 8.0x |
| PEG Fair Value | Relative | $393.21 | 0.66x | yes | EPS $15.55 × (PEG 1.5 × growth 16.9% (input: historical EPS growth)) → PE 25.3x |
| Earnings Yield | Earnings | $168.11 | 1.55x | yes | EPS $15.55 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $1.1b |
| Net debt / NOPAT (after-tax) | 1.73x |
| Net debt / operating income (pre-tax) | 1.43x |
| Interest coverage | 13.7x |
| Share count CAGR (buyback) | -1.1% |
| Burning cash | no |
Bullet Takeaways
At $221.53 FactSet trades at about 12x company-wide operating income, a multiple so low the inversion notes the price sits below what even a 5% annual profit decline would warrant; the reverse-DCF band of about $350 to $478 sits well above the price, so the market is pricing in AI-driven decline.
The fundamentals contradict that: Q2 fiscal 2026 revenue rose 7.1% to $611.0 million, organic Annual Subscription Value grew 6.7% to $2,450.2 million, the trailing operating margin is above 30%, and management raised full-year EPS guidance to $17.25 to $17.75.
The structural debate is AI: assistants can sit atop generic data, pressuring pricing power and pushing technology costs higher, and some analysts cut targets toward $195 to $210; the bull counters that AI needs trusted, structured data and that FactSet (named an AI plug-in partner) is positioned as that substrate.
Bull Case
Start with what the market seems to be pricing in, because it is unusually gloomy for a business this steady. At $221.53 (June 27, 2026) FactSet trades at about 12x company-wide operating income, a multiple so low the inversion notes the price sits below what even a 5% annual operating-profit decline would warrant. The market is, in effect, pricing FactSet as a melting ice cube, an assumption driven by the fear that AI assistants will commoditize financial data. The bull case is that the fundamentals flatly contradict that fear: this is a recurring-revenue, high-margin franchise still growing, not shrinking.
The fundamentals are the rebuttal. FactSet's second-quarter fiscal 2026 revenue rose 7.1% to $611.0 million, EPS was $4.46 (a beat), and Annual Subscription Value reached $2,450.2 million, with organic ASV up 6.7% year over year. Subscription value growing nearly 7% organically is the opposite of decline; it is a sticky base of asset managers, banks, and wealth platforms renewing and expanding their seats. The business carries a trailing operating margin above 30%, the signature of a workflow-embedded data and analytics platform whose customers find it costly to rip out. Management raised full-year fiscal 2026 guidance to EPS of $17.25 to $17.75 on revenue of about $2.5 billion, which is not how a company guides when its product is being commoditized.
The AI angle, properly read, is a tailwind as much as a threat. FactSet launched an alpha version of FactSet AI for Banking and was named a partner in a major AI provider's new plug-ins for business customers, targeting investment-banking and wealth-management workflows. The strategic point is that AI assistants need trusted, structured, permissioned data to sit on top of, and FactSet's curated dataset plus its deep workflow integration is exactly that substrate. The relative-multiple and growth-DCF families both justify the price. The bull wager is that a 7%-growing, 30%-plus-margin subscription franchise priced for decline is mispriced, and that AI ends up amplifying demand for the trusted data it sells rather than replacing it.
Bear Case
The capital-allocation question hanging over FactSet is whether it can keep spending enough to defend its franchise without eroding the margin that justifies its valuation. The company is being forced to invest heavily in AI to stay relevant, and analysts have flagged rising technology costs as a direct pressure on profitability. That is the bear's core capital-allocation worry: a business that historically converted a high-margin subscription base into steady returns now has to plow growing sums into AI development and partnerships just to hold its position. Spending to defend, rather than to grow, is a different and worse use of capital, and if the AI arms race demands ever-higher reinvestment, the operating margin above 30% that underpins the price is the thing at risk.
The competitive disruption is real, not hypothetical. AI-powered assistants can increasingly sit on top of generic data sources, which sharpens the question of how much value lies in FactSet's raw data versus the software and workflow wrapped around it. Bloomberg, S&P, and a wave of AI-native entrants are all pressing on the same market, and the analyst community is split: some raised targets, but Barclays and Bank of America cut theirs into the $195 to $210 range citing AI competition and pricing-power concerns. When the bears on the sell side are cutting targets on structural grounds, the low multiple the market is paying may be a considered judgment about decelerating growth and compressed pricing power, not a mistake.
The valuation tension is the crux. The earnings-power family already reads the stock as somewhat full, while the relative-multiple and growth-DCF families reach the price, so the bull case leans on the frames that credit continued growth. If organic ASV growth, recently 6.7%, decelerates as AI commoditizes parts of the data stack, or if pricing power erodes and technology spending climbs, the growth frame loses its support. Net debt near $1.1 billion is modest with comfortable coverage, so leverage is not the issue; the issue is that the price needs the subscription growth and margin to hold against a genuine structural threat. The bear's view is that paying even a modest multiple for a franchise whose moat is being tested by AI, and whose defense requires escalating reinvestment, is less of a bargain than the headline 12x suggests.
Valuation
FactSet is priced at about 12x company-wide operating income, a low multiple for a recurring-revenue, high-margin data franchise. The inversion notes the multiple is so low that the price sits below what even a 5% annual operating-profit decline would warrant, which is a bound rather than a solved point: the market is effectively pricing in shrinkage.
The method families frame the debate cleanly. The relative-multiple and growth-DCF families justify the price, while the earnings-power family reads the stock as somewhat full. The bull leans on the peer and forward-growth frames, which credit the 6.7% organic ASV growth and the 30%-plus margin; the bear leans on the risk that AI competition decelerates that growth and that rising technology spending compresses the margin, which would undercut the very frames holding the price up.
The honest read: this is a high-quality subscription franchise trading at a multiple that implies decline, against fundamentals that are still growing. Revenue rose 7.1% to $611.0 million, organic ASV grew 6.7%, and management raised full-year fiscal 2026 guidance to EPS of $17.25 to $17.75. The gap between a decline-priced multiple and growing guidance is the opportunity; the catch is the structural AI question, which is why some analysts cut targets toward $195 to $210 even as the business grew. The cleaner way to weigh the price is against organic ASV growth and the operating-margin trajectory, treating the low multiple as the market's discount for AI-disruption risk rather than a reflection of current performance.
Catalysts
The most recent catalyst was the second-quarter fiscal 2026 report (quarter ended February 28, 2026). FactSet posted GAAP revenue up 7.1% to $611.0 million and EPS of $4.46, beating the $4.37 consensus. Annual Subscription Value reached $2,450.2 million, with organic ASV up 6.7% year over year. Management raised full-year fiscal 2026 guidance to EPS of $17.25 to $17.75 on revenue of about $2.5 billion (FactSet 8-K, MarketBeat, Norwalk Today).
The dominant narrative catalyst is AI. The company launched an alpha version of FactSet AI for Banking and was named a partner in a major AI provider's new plug-ins for business customers, targeting investment-banking and wealth-management workflows. At the same time, analyst opinion split sharply: EvercoreISI raised its target toward $321, while Barclays and Bank of America cut targets to the $195 to $210 range, citing AI competition and concerns about pricing power and rising technology costs (Yahoo Finance, Investing.com, ainvest).
The forward catalysts are the next quarterly print (the third-quarter fiscal 2026 report is due around July 1, with consensus EPS near $4.45) and the trajectory of organic ASV growth. The thesis turns on whether subscription growth holds against AI competition and whether the margin absorbs rising technology spending. Continued mid-single-digit-plus ASV growth with a stable margin would support the case that the decline-priced stock is mispriced; a deceleration in ASV or margin compression from AI investment would be the clearest near-term risks (Alphastreet, MarketBeat).
Peer Cohorts (Per Segment, With Filing Citations)
Core business (reported)
- VRSK (Verisk Analytics, Inc.)
- (no filing in the citation store)
- NIQ (NIQ Global Intelligence plc)
- (no filing in the citation store)
- CLVT (CLARIVATE PLC)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.