Gross profit margin of 22.3% is rather low, having decreased from the same quarter last year. It's 3.1% net profit margin trails the industry average. Net income has decreased by 9.4%, significantly underperforming the food products industry but outperforming the S&P 500.
We've downgraded FactSet Research Systems (FDS) from buy to hold. Strengths include its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and growth in earnings per share. Weaknesses include a generally disappointing performance in the stock itself and weak operating cash flow.
Revenue growth of 18.7% since the same quarter a year ago came in higher than the industry average of 4.5%, and EPS improved. FactSet has no debt to speak of, as well as a quick ratio of 2.35, which demonstrates the ability of the company to cover short-term liquidity needs. The return on equity has improved slightly when compared to the same quarter one year prior, outperforming the S&P 500 but underperforming the industry average. Despite a decrease in cash flow of 30.14%, FactSet is in line with the industry average cash flow growth rate of -33.00%.
Shares are down 43.87% on the year, underperforming the S&P 500 index. Naturally, the overall market trend is bound to be a significant factor, and in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
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