Financial stock under pressure: FactSet Research Systems Inc. (NYSE: FDS)

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FactSet Research Systems Inc. (NYSE: FDS) stock lost over 2.93% on 26th, 2020 (as of 11:18 am GMT-4; Source: Google finance) after the company posted mixed results for the third quarter of FY 20. FDS in the third quarter of FY 20 has reported the adjusted earnings per share of $2.86, while reported the adjusted revenue growth of 2.6 percent to $374.08 million in the third quarter of FY 20, missing the analysts’ estimates for revenue by 0.90%.  FactSet has raised its full fiscal year earnings guidance to be in a range of $10.40 to $10.60 per share, up from $9.85 to $10.15 per share, while lowered its revenue guidance to be in a range of $1.485 billion to $1.49 billion, from $1.49 billion to $1.5 billion. The company expects full year ASV to be in the range of $60 million to $75 million.

The company’s client count grew by 55 to 5,743, and its user count increased by 2,199 to 131,095. The adjusted net income rose by almost 20% to $102.1 million. Sell-side customers had posted slightly faster growth in annual subscription value, which came in at 6.8% compared ti the corresponding 5.2% growth for buy-side clients. Domestic growth also slightly outpaced gains in what FactSet brings in internationally by a 5.2% to 4.4% margin. Further, Free cash flow less capital spending, was $140 million for the third quarter, which represents a decrease of 6% over the same period last year. This reduction is mainly due to the timing of certain international tax payments.

Geographically, Americas revenue grew 2%, EMEA 3% and Asia-Pacific was the highest at 7% year-over-year. The regions mainly benefited from increases in Analytics, Wealth and CTS. The company increased ASV by $14 million or 5% year-over-year, due to strong growth through existing clients with continued strong retention and realization of cross-sell opportunities. The adjusted operating margin expanded to 35.5% compared to 34.0% in the prior year period mainly due to reduced employee-related operating expenses driven by the coronavirus pandemic.

Additionally, for the third quarter, the company bought back 47,000 shares for an aggregate of $12 million at an average share price of $266. Year-to-date, the company had repurchased $173 million of the shares. Over the last 12-months, the company had returned over $343 million to the investors in the form of dividends and share repurchases. The company has recently increased the dividend by 7% to $0.77.

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