FactSet Research Produces Huge FCF in its FY Q1 Earnings - FDS Stock Looks Deeply Undervalued

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FactSet Research Systems (FDS), which supplies many Wall Street firms with data and research, produced a massive free cash flow (FCF) result in its latest quarter. If this keeps up, FDS stock could be...

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If this keeps up, FDS stock could be...</p>\n\n<a href=\"https://www.barchart.com/story/news/26985544/factset-research-produces-huge-fcf-in-its-fy-q1-earnings-fds-stock-looks-deeply-undervalued\">Source Link</a>\n\n</div>\n","source":"barchart_highlight","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>FactSet Research Produces Huge FCF in its FY Q1 Earnings - FDS Stock Looks Deeply Undervalued</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nFactSet Research Produces Huge FCF in its FY Q1 Earnings - FDS Stock Looks Deeply Undervalued\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-06-24 00:16 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.barchart.com/story/news/26985544/factset-research-produces-huge-fcf-in-its-fy-q1-earnings-fds-stock-looks-deeply-undervalued><strong>Barchart</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>FactSet Research Systems (FDS), which supplies many Wall Street firms with data and research, produced a massive free cash flow (FCF) result in its latest quarter. If this keeps up, FDS stock could be...</p>\n\n<a href=\"https://www.barchart.com/story/news/26985544/factset-research-produces-huge-fcf-in-its-fy-q1-earnings-fds-stock-looks-deeply-undervalued\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"FCF","symbol_name":"第一联邦金融","start_time":0,"source_url":"https://www.barchart.com/story/news/26985544/factset-research-produces-huge-fcf-in-its-fy-q1-earnings-fds-stock-looks-deeply-undervalued","article_id":"2445529510","we_media_id":null,"thumbnails":["https://media.barchart.com/contributors-admin/common-images/images/Stocks%2C%20Markets%2C%20%26%20Global%20Economy/Charts%2C%20tickers%2C%20traders/iStock-1147352160.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2445529510","pubTimestamp":1719159385,"sourceInfo":{"source_id":"barchart_highlight","name":"Barchart"},"weMediaInfo":null,"summary":"FactSet Research Systems , which supplies many Wall Street firms with data and research, produced a massive free cash flow  result in its latest quarter. If this keeps up, FDS stock could be deeply undervalued.FDS closed at $423.73 on Friday. I estimate the stock is worth at least 68% more at $712 per share. This article will show why.The company's results for its fiscal Q3, released on Friday, June 21, show that it had a massive gain in free cash flow and FCF margins. This augurs well for the company's valuation from now on.The company's revenue rose 4.3% from the prior year and its adjusted operating margin hit 39.4%, up 340 basis points Y/Y. This fed straight into its free cash flow and FCF margins.For example, FactSet generated almost $217 million during the quarter, on $552.7 million in revenue. That means that its FCF margin was an astounding 39.3%.FactSet Fiscal Q3 free cash flow - Earnings release June 21, 2024. One way to play this is to sell short out-of-the-money  put option","collect":0,"end_time":0,"defaultTopTitle":"barchart.com","property":["earning"],"viewcount":null,"language":"en","relate_stocks":{"FCF":"第一联邦金融","FDS":"辉盛研究系统"},"translate_title":"FactSet Research在其财年第一季度收益中产生了巨大的自由现金流——FDS股票看起来被严重低估","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"FCF":1,"FDS":1},"content_text":"FactSet Research Systems (FDS), which supplies many Wall Street firms with data and research, produced a massive free cash flow (FCF) result in its latest quarter. If this keeps up, FDS stock could be deeply undervalued. \nFDS closed at $423.73 on Friday. I estimate the stock is worth at least 68% more at $712 per share. This article will show why.\nThe company's results for its fiscal Q3, released on Friday, June 21, show that it had a massive gain in free cash flow and FCF margins. This augurs well for the company's valuation from now on.\nFree Cash Flow Surging\nThe company's revenue rose 4.3% from the prior year and its adjusted operating margin hit 39.4%, up 340 basis points Y/Y. This fed straight into its free cash flow and FCF margins.\nFor example, FactSet generated almost $217 million during the quarter, on $552.7 million in revenue. That means that its FCF margin was an astounding 39.3%.\nHere is how to look at this. For every dollar in revenue the company makes, it can save over 39 cents and keep it in the checking account, with no obligations or expenses left to pay. In effect, it's free to pay this amount out to shareholders.\n\n\n\n  FactSet Fiscal Q3 free cash flow - Earnings release June 21, 2024\n\n\nAs a result, the stock's valuation is worth a good deal more. Here is how that works out.\nEstimating FactSet's Value\nAnalysts estimate that the company will generate between $2.2 billion and $2.32 billion in revenue between this fiscal year and next. That means its run rate revenue for the next 12 months (NTM) is $2.26 billion.\nSo, if we apply a 39% FCF margin against this we can estimate the company will generate $881 million in NTM FCF. But just to be conservative, let's use a 36% FCF margin. It follows that FactSet could at least make $814 million in FCF going forward.\nThat is useful in setting a valuation for the stock. \nTarget Price for FDS Stock\nFor example, what if the company paid this out in dividends? Right now, the company pays out $112 million each quarter, or about 52% of its $216 million in quarterly FCF. It has a 1% dividend yield at today's payout ratio.\nSo, theoretically, if the company paid out 100% of the FCF, the stock might have a 2% or 2.2% yield. Just to be conservative let's use a 2.5% FCF yield metric. In other words, if we divide the $814 million in FCF by 2.5% we get a market cap estimate of $32.56 billion.\nThat is 100% higher than its present $16.15 billion market cap. To be even more conservative, let's use a 3.0% FCF yield metric. That implies FDS stock is worth at least $27.13 billion (i.e., $814 million/0.03 = $27.133 billion).\nThis is still 68% higher than its existing $16.15 billion market cap. In other words, FDS stock is worth 68% more than $423.73 per share, i.e., a $712 price target.\nShorting OTM Puts\nOne way to play this is to sell short out-of-the-money (OTM) put options. This allows an investor to buy in at a lower price if the stock falls, as well as gain some extra income.\nFor example, look at the July 19 expiration period, 27 days from now. It shows that the $410 strike price puts trade for $3.00 on the bid side.\n\n\n\nFDS puts expiring July 19 - Barchart - As of June 21\n\n\nThat represents an immediate yield of 0.73% for the short seller of these puts (i.e., $3.00/$410.00 = 0.0073). Here is how that works.\nThe investor first secures $41,000 in cash and/or margin with their brokerage firm. Then they enter an order to “Sell to Open” 1 put contract at $410 for expiry on July 19. The account will then immediately receive $300.00. This is because each contract represents 100 shares.\nThen, as long as the stock stays above $410 on or before July 19, the account will not have an obligation to purchase 100 shares at $410.00. And no matter what happens the account keeps the $300.\nThat means that the effective breakeven buy-in price if the stock falls to $410, is $410-$3.00, or $408.00 per share. This means that the breakeven price is 3.7% below today's price. That provides good downside protection.\nThe point is that existing investors who already own FDS shares can make almost a 1% yield over the next month. Plus they have all the potential upside in the stock. But for other investors, it provides a disciplined way to buy, in case the stock falls.\nThe bottom line is that FDS stock is worth a good deal more than its present price, given its huge FCF margins. One way to play this is to buy the stock and also short OTM puts.More Stock Market News from Barchart \n\n2 Top Semiconductor Stocks to Buy for More AI Upside\n1 'Big 3' Auto Stock That Looks Set to Outperform\n3 Overheated Tech Stocks to Skip This Summer\nGrab This Cybersecurity Stock Now for AI-Driven Revenue Growth\n On the date of publication, Mark R. Hake, CFA did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.24.2","shortVersion":"4.24.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2445529510"}