FactSet Beats on Margins but Guidance Disappoints
FactSet beat quarterly EPS estimates with a trailing gross margin of 50.6%, but missed on guidance, triggering a 3% sell-off that partially rebounded on margin strength. The stock sits below the analy
FactSet Beats on Margins but Guidance Disappoints
NEW YORK, October 4 —
A guidance miss landed harder than the EPS beat at FactSet Research Systems Inc. (FDS): shares fell over 3% on the outlook before margin strength drove a 3.8% rebound, leaving the stock below both the analyst consensus target and the CEO's pre-earnings disposal price.
- Quarterly EPS beat analyst estimates; revenue came in line with expectations; shares fell over 3% on guidance.
- Stock recovered 3.8% on margin strength but sits at $266, below the $277.56 analyst consensus target.
- Short interest at 12.4% of float; trailing free cash flow of $642 million over the past year.
Where the Beat Lives
FactSet sells financial data, analytical workstations, portfolio analytics, and enterprise data solutions to asset managers, hedge funds, investment bankers, and wealth managers, businesses that renew subscriptions because the switching cost of rebuilding a data workflow rivals the cost of keeping it. On that sticky base, the September quarter produced a genuine EPS beat and trailing gross margin of 50.6%, with free cash flow of $642 million over the past twelve months. The problem is the top line: revenue grew 6.3% year-over-year to $2.48 billion on a trailing basis, arriving in-line with estimates, no surprise, no sign of reacceleration.
Below the Pre-Earnings Waterline
The guidance is what the market priced in. CEO Sanoke Viswanathan had 8,065 shares withheld at $276.42 on September 22 to cover tax obligations on equity compensation, a disposal that landed above the current price of $266, per the Form 4 filing. That four-dollar gap is not alarming in isolation, but it sits alongside a new material financial obligation disclosed in an August 31 8-K that added to a $1.54 billion debt load against just $270 million in cash, and a leadership change filing five days before earnings per the September 25 8-K.
| Ticker | Mkt cap | Fwd P/E | 52-wk |
|---|---|---|---|
| FDS | $9.5B | 12.2x | -3.3% |
| JKHY | $10.0B | 18.1x | -3.5% |
| BRO | $20.0B | 12.4x | -36.6% |
| IT | $11.7B | 11.3x | -27.9% |
| MSCI | $39.0B | 23.8x | -5.1% |
| MKTX | $5.8B | 18.8x | -2.2% |
The One Number That Changes the Trade
At a forward P/E of 12.2x, FDS is priced for slow growth, not a reacceleration story. The Google Cloud AI partnership has not yet shown up in the revenue line. Short interest of 12.4% shows that skeptics are not yet persuaded by the margin defense, and the alternating EPS miss-beat pattern over the prior four quarters is not the signature of a disciplined forecasting process. Revenue growth re-accelerating beyond 6.3% next quarter is the number that changes the trade; stress-test the multiple with the PE calculator, or run the free FactSet Research Systems Inc. deep-dive → for the full picture.
Basis Report is independent research for informational purposes. It is not investment advice and not a recommendation to buy or sell any security.
Frequently Asked Questions
Did FactSet beat earnings?
FactSet beat quarterly EPS estimates and showed a trailing gross margin of 50.6%, but missed on guidance, causing shares to fall 3% before recovering.
Why did FDS stock price drop?
Guidance disappointed investors, triggering a 3% sell-off before the stock rebounded 3.8% as the market focused on strong margin performance.
What was FactSet's revenue growth?
Revenue grew 6.3% year-over-year to $2.48 billion on a trailing basis, arriving in-line with analyst expectations with no sign of reacceleration.
What is FactSet's current valuation?
FactSet trades at a forward P/E of 12.2x, which reflects pricing for slow growth rather than a reacceleration story.
How much debt does FactSet have?
FactSet carries a $1.54 billion debt load against $270 million in cash, with a new material financial obligation disclosed in an August 31 8-K filing.
FactSet Research Systems reported quarterly earnings that beat EPS estimates and showed strong margins, yet the stock first fell over 3% on disappointing guidance before rebounding 3.8% the following session — leaving investors to reconcile an improving cost story with a slowing-growth signal buried in the outlook.