Why FactSet Research Systems (FDS) Is Gaining on Tuesday

NEW YORK (TheStreet) -- FactSet Research Systems (FDS) is climbing on Tuesday after second-quarter earnings and sales came in above analysts' estimates.

By late afternoon, shares had added 9.6% to $114.53. Trading volume of 1.2 million was more than triple its three-month daily average.

The information and analytics provider reported net income of $1.22 a share in the three months to February, a penny higher than analysts surveyed by Thomson Reuters had forecast.

Revenue of $226.9 million was 6.5% higher year over year and beat expectations by $570,000.

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TheStreet Ratings team rates FACTSET RESEARCH SYSTEMS INC as a Buy with a ratings score of B. The team has this to say about their recommendation:

"We rate FACTSET RESEARCH SYSTEMS INC (FDS) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, growth in earnings per share and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.3%. Since the same quarter one year prior, revenues slightly increased by 5.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • FDS has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.70, which clearly demonstrates the ability to cover short-term cash needs.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Software industry and the overall market, FACTSET RESEARCH SYSTEMS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • FACTSET RESEARCH SYSTEMS INC has improved earnings per share by 7.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, FACTSET RESEARCH SYSTEMS INC increased its bottom line by earning $4.47 versus $4.14 in the prior year. This year, the market expects an improvement in earnings ($4.97 versus $4.47).
  • Net operating cash flow has increased to $58.14 million or 14.81% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -0.21%.

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