have flourished this year as the Wall Street survivors snagged market share from defunct outfits like
. The companies that build trading and analytics programs have enjoyed comparable success, but are receiving less attention from investors.
FactSet Research Systems
designs applications for investment professionals. Its risk-management tools add value during market turmoil. So when financial markets swoon, FactSet's stock benefits. The company has achieved a three-year growth rate of 17% for revenue and 20% for profit.
The company's fiscal fourth-quarter net income rose 8% to $36 million, or 74 cents a share. Revenue inched up 1% to $156 million. Its gross margin remained steady at 72% and its operating margin grew from 33% to 35%. The company holds $216 million of cash and no debt.
FactSet has tailor-made applications for wealth managers, institutional asset managers, hedge funds and research professionals. Its platforms give clients access to proprietary data. It collects a swath of information from third-parties, and then compiles and organizes it for clients.
Money management and trading decisions are made in real-time. The only edge in the markets is through superior research and technological innovation. Professional investors are in a perpetual arms race to gain an edge in financial markets.
This trend has helped FactSet consistently grow profits since its inception in 1978. Its stock has doubled over the past five years and is up 265% over a 10-year period, far outperforming major U.S. indices. Shares have rallied 37% this year, more than the
Dow Jones Industrial Average
S&P 500 Index
FactSet trades at a price-to-earnings ratio of 23, a premium to the market, but a discount to application software peers. Shares pay a 1.3% dividend yield and have a beta, a measure of market correlation, of 1.4. We rate FactSet "buy."
-- Reported by Jake Lynch in Boston.