Intrinsic value of FactSet Research Systems Inc. - FDS

Previous Close

$298.08

  Intrinsic Value

$158.73

stock screener

  Rating & Target

sell

-47%

Previous close

$298.08

 
Intrinsic value

$158.73

 
Up/down potential

-47%

 
Rating

sell

We calculate the intrinsic value of FDS stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 11.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  6.80
  6.62
  6.46
  6.31
  6.18
  6.06
  5.96
  5.86
  5.77
  5.70
  5.63
  5.56
  5.51
  5.46
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
  5.20
  5.18
  5.16
  5.14
  5.13
  5.12
  5.10
  5.09
  5.08
Revenue, $m
  1,442
  1,537
  1,637
  1,740
  1,847
  1,959
  2,076
  2,198
  2,325
  2,457
  2,595
  2,740
  2,891
  3,049
  3,213
  3,386
  3,567
  3,756
  3,954
  4,161
  4,378
  4,606
  4,844
  5,094
  5,356
  5,631
  5,919
  6,221
  6,538
  6,870
Variable operating expenses, $m
  1,021
  1,083
  1,147
  1,214
  1,284
  1,357
  1,432
  1,511
  1,594
  1,680
  1,684
  1,778
  1,876
  1,978
  2,085
  2,197
  2,315
  2,437
  2,566
  2,700
  2,841
  2,989
  3,144
  3,306
  3,476
  3,654
  3,841
  4,037
  4,243
  4,459
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  1,021
  1,083
  1,147
  1,214
  1,284
  1,357
  1,432
  1,511
  1,594
  1,680
  1,684
  1,778
  1,876
  1,978
  2,085
  2,197
  2,315
  2,437
  2,566
  2,700
  2,841
  2,989
  3,144
  3,306
  3,476
  3,654
  3,841
  4,037
  4,243
  4,459
Operating income, $m
  421
  455
  489
  526
  563
  603
  644
  686
  731
  777
  911
  962
  1,015
  1,070
  1,128
  1,189
  1,252
  1,318
  1,388
  1,461
  1,537
  1,617
  1,700
  1,788
  1,880
  1,977
  2,078
  2,184
  2,295
  2,412
EBITDA, $m
  540
  576
  613
  651
  692
  734
  777
  823
  870
  920
  972
  1,026
  1,082
  1,141
  1,203
  1,268
  1,335
  1,406
  1,480
  1,558
  1,639
  1,724
  1,814
  1,907
  2,005
  2,108
  2,216
  2,329
  2,448
  2,572
Interest expense (income), $m
  0
  31
  34
  38
  41
  45
  49
  53
  57
  61
  66
  71
  76
  81
  86
  92
  98
  104
  110
  117
  124
  132
  139
  147
  156
  165
  174
  184
  194
  205
  217
Earnings before tax, $m
  390
  420
  452
  484
  518
  554
  591
  629
  670
  712
  840
  886
  934
  984
  1,036
  1,091
  1,148
  1,208
  1,271
  1,336
  1,405
  1,477
  1,553
  1,632
  1,715
  1,802
  1,894
  1,989
  2,090
  2,195
Tax expense, $m
  105
  113
  122
  131
  140
  150
  160
  170
  181
  192
  227
  239
  252
  266
  280
  295
  310
  326
  343
  361
  379
  399
  419
  441
  463
  487
  511
  537
  564
  593
Net income, $m
  285
  307
  330
  354
  378
  404
  431
  459
  489
  519
  614
  647
  682
  718
  756
  796
  838
  882
  928
  976
  1,026
  1,079
  1,134
  1,191
  1,252
  1,316
  1,382
  1,452
  1,526
  1,602

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  1,499
  1,598
  1,701
  1,809
  1,920
  2,037
  2,158
  2,285
  2,416
  2,554
  2,698
  2,848
  3,005
  3,169
  3,340
  3,520
  3,708
  3,904
  4,110
  4,325
  4,551
  4,788
  5,035
  5,295
  5,568
  5,853
  6,153
  6,467
  6,796
  7,142
Adjusted assets (=assets-cash), $m
  1,499
  1,598
  1,701
  1,809
  1,920
  2,037
  2,158
  2,285
  2,416
  2,554
  2,698
  2,848
  3,005
  3,169
  3,340
  3,520
  3,708
  3,904
  4,110
  4,325
  4,551
  4,788
  5,035
  5,295
  5,568
  5,853
  6,153
  6,467
  6,796
  7,142
Revenue / Adjusted assets
  0.962
  0.962
  0.962
  0.962
  0.962
  0.962
  0.962
  0.962
  0.962
  0.962
  0.962
  0.962
  0.962
  0.962
  0.962
  0.962
  0.962
  0.962
  0.962
  0.962
  0.962
  0.962
  0.962
  0.962
  0.962
  0.962
  0.962
  0.962
  0.962
  0.962
Average production assets, $m
  570
  607
  646
  687
  730
  774
  820
  868
  918
  971
  1,025
  1,082
  1,142
  1,204
  1,269
  1,337
  1,409
  1,484
  1,562
  1,644
  1,729
  1,819
  1,913
  2,012
  2,116
  2,224
  2,338
  2,457
  2,582
  2,714
Working capital, $m
  -30
  -32
  -34
  -37
  -39
  -41
  -44
  -46
  -49
  -52
  -55
  -58
  -61
  -64
  -67
  -71
  -75
  -79
  -83
  -87
  -92
  -97
  -102
  -107
  -112
  -118
  -124
  -131
  -137
  -144
Total debt, $m
  636
  699
  765
  833
  904
  979
  1,056
  1,136
  1,221
  1,308
  1,400
  1,495
  1,595
  1,700
  1,809
  1,923
  2,043
  2,168
  2,299
  2,436
  2,580
  2,731
  2,889
  3,054
  3,228
  3,410
  3,600
  3,800
  4,010
  4,230
Total liabilities, $m
  955
  1,018
  1,084
  1,152
  1,223
  1,297
  1,375
  1,455
  1,539
  1,627
  1,719
  1,814
  1,914
  2,019
  2,128
  2,242
  2,362
  2,487
  2,618
  2,755
  2,899
  3,050
  3,208
  3,373
  3,547
  3,728
  3,919
  4,119
  4,329
  4,549
Total equity, $m
  544
  580
  618
  657
  697
  739
  783
  829
  877
  927
  979
  1,034
  1,091
  1,150
  1,213
  1,278
  1,346
  1,417
  1,492
  1,570
  1,652
  1,738
  1,828
  1,922
  2,021
  2,125
  2,233
  2,347
  2,467
  2,592
Total liabilities and equity, $m
  1,499
  1,598
  1,702
  1,809
  1,920
  2,036
  2,158
  2,284
  2,416
  2,554
  2,698
  2,848
  3,005
  3,169
  3,341
  3,520
  3,708
  3,904
  4,110
  4,325
  4,551
  4,788
  5,036
  5,295
  5,568
  5,853
  6,152
  6,466
  6,796
  7,141
Debt-to-equity ratio
  1.170
  1.210
  1.240
  1.270
  1.300
  1.320
  1.350
  1.370
  1.390
  1.410
  1.430
  1.450
  1.460
  1.480
  1.490
  1.510
  1.520
  1.530
  1.540
  1.550
  1.560
  1.570
  1.580
  1.590
  1.600
  1.600
  1.610
  1.620
  1.630
  1.630
Adjusted equity ratio
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363
  0.363

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  285
  307
  330
  354
  378
  404
  431
  459
  489
  519
  614
  647
  682
  718
  756
  796
  838
  882
  928
  976
  1,026
  1,079
  1,134
  1,191
  1,252
  1,316
  1,382
  1,452
  1,526
  1,602
Depreciation, amort., depletion, $m
  119
  121
  123
  126
  128
  131
  134
  136
  139
  143
  61
  64
  68
  71
  75
  79
  83
  88
  92
  97
  102
  108
  113
  119
  125
  132
  138
  145
  153
  161
Funds from operations, $m
  403
  428
  453
  479
  507
  535
  565
  596
  628
  662
  674
  711
  749
  790
  832
  876
  922
  970
  1,020
  1,073
  1,128
  1,186
  1,247
  1,311
  1,377
  1,447
  1,521
  1,598
  1,678
  1,763
Change in working capital, $m
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
Cash from operations, $m
  405
  430
  455
  482
  509
  538
  567
  598
  631
  665
  677
  714
  753
  793
  835
  879
  925
  974
  1,024
  1,077
  1,133
  1,191
  1,252
  1,316
  1,383
  1,453
  1,527
  1,604
  1,685
  1,770
Maintenance CAPEX, $m
  -32
  -34
  -36
  -38
  -41
  -43
  -46
  -49
  -51
  -54
  -57
  -61
  -64
  -68
  -71
  -75
  -79
  -83
  -88
  -92
  -97
  -102
  -108
  -113
  -119
  -125
  -132
  -138
  -145
  -153
New CAPEX, $m
  -36
  -38
  -39
  -41
  -42
  -44
  -46
  -48
  -50
  -52
  -55
  -57
  -60
  -62
  -65
  -68
  -71
  -75
  -78
  -82
  -86
  -90
  -94
  -99
  -103
  -109
  -114
  -119
  -125
  -131
Cash from investing activities, $m
  -68
  -72
  -75
  -79
  -83
  -87
  -92
  -97
  -101
  -106
  -112
  -118
  -124
  -130
  -136
  -143
  -150
  -158
  -166
  -174
  -183
  -192
  -202
  -212
  -222
  -234
  -246
  -257
  -270
  -284
Free cash flow, $m
  338
  358
  380
  402
  426
  450
  475
  502
  529
  558
  565
  596
  629
  663
  699
  736
  775
  816
  858
  903
  950
  999
  1,050
  1,104
  1,160
  1,219
  1,281
  1,346
  1,414
  1,486
Issuance/(repayment) of debt, $m
  61
  63
  66
  68
  71
  74
  77
  81
  84
  88
  92
  96
  100
  104
  109
  114
  120
  125
  131
  137
  144
  151
  158
  165
  173
  182
  191
  200
  210
  220
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  61
  63
  66
  68
  71
  74
  77
  81
  84
  88
  92
  96
  100
  104
  109
  114
  120
  125
  131
  137
  144
  151
  158
  165
  173
  182
  191
  200
  210
  220
Total cash flow (excl. dividends), $m
  399
  422
  446
  471
  497
  524
  553
  582
  613
  646
  657
  692
  729
  767
  808
  850
  894
  941
  989
  1,040
  1,094
  1,149
  1,208
  1,269
  1,334
  1,401
  1,472
  1,546
  1,624
  1,706
Retained Cash Flow (-), $m
  -35
  -36
  -37
  -39
  -41
  -42
  -44
  -46
  -48
  -50
  -52
  -54
  -57
  -60
  -62
  -65
  -68
  -71
  -75
  -78
  -82
  -86
  -90
  -94
  -99
  -104
  -109
  -114
  -120
  -125
Prev. year cash balance distribution, $m
  17
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  381
  386
  408
  432
  456
  482
  509
  537
  566
  596
  604
  637
  672
  708
  746
  785
  826
  869
  915
  962
  1,012
  1,064
  1,118
  1,175
  1,235
  1,298
  1,363
  1,432
  1,505
  1,581
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  365
  353
  355
  356
  354
  350
  344
  335
  325
  312
  287
  272
  255
  238
  219
  199
  180
  160
  141
  122
  105
  88
  73
  60
  48
  38
  29
  22
  16
  12
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Factset Research Systems Inc. is engaged in providing integrated financial information and big data analytical applications for the global investment community. The Company's segments include the U.S., Europe and Asia Pacific. The U.S. segment services finance professionals, including financial institutions throughout the Americas. The European segment maintains offices in France, Germany, Italy, Ireland, Latvia, Luxembourg, the Netherlands, Spain, South Africa, Sweden and Dubai. The Asia Pacific segment maintains office locations in Australia, Hong Kong, Singapore and Mumbai, India. The Company delivers insight and information to investment professionals through its analytics, service, content, and technology. Its offerings include a complete services solution focused on verifying, cleaning and loading portfolio data across asset classes, and an execution management system. The Company offers third-party content through desktop, wireless and off-platform solutions.

FINANCIAL RATIOS  of  FactSet Research Systems Inc. (FDS)

Valuation Ratios
P/E Ratio 45.1
Price to Sales 9.5
Price to Book 20.8
Price to Tangible Book
Price to Cash Flow 36.2
Price to Free Cash Flow 41
Growth Rates
Sales Growth Rate 8.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -22.9%
Cap. Spend. - 3 Yr. Gr. Rate 15.5%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 102.7%
Total Debt to Equity 102.7%
Interest Coverage 0
Management Effectiveness
Return On Assets 21.2%
Ret/ On Assets - 3 Yr. Avg. 31.4%
Return On Total Capital 26.4%
Ret/ On T. Cap. - 3 Yr. Avg. 40%
Return On Equity 47.9%
Return On Equity - 3 Yr. Avg. 52.9%
Asset Turnover 1
Profitability Ratios
Gross Margin 53.6%
Gross Margin - 3 Yr. Avg. 56.7%
EBITDA Margin 32.1%
EBITDA Margin - 3 Yr. Avg. 37.5%
Operating Margin 28.7%
Oper. Margin - 3 Yr. Avg. 34.2%
Pre-Tax Margin 28.2%
Pre-Tax Margin - 3 Yr. Avg. 34.1%
Net Profit Margin 21.1%
Net Profit Margin - 3 Yr. Avg. 25%
Effective Tax Rate 25%
Eff/ Tax Rate - 3 Yr. Avg. 26.4%
Payout Ratio 31.4%

FDS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FDS stock intrinsic value calculation we used $1350 million for the last fiscal year's total revenue generated by FactSet Research Systems Inc.. The default revenue input number comes from 0001 income statement of FactSet Research Systems Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our FDS stock valuation model: a) initial revenue growth rate of 6.8% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for FDS is calculated based on our internal credit rating of FactSet Research Systems Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of FactSet Research Systems Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of FDS stock the variable cost ratio is equal to 71.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for FDS stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for FactSet Research Systems Inc..

Corporate tax rate of 27% is the nominal tax rate for FactSet Research Systems Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the FDS stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for FDS are equal to 39.5%.

Life of production assets of 16.9 years is the average useful life of capital assets used in FactSet Research Systems Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for FDS is equal to -2.1%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $525.9 million for FactSet Research Systems Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 38.043 million for FactSet Research Systems Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of FactSet Research Systems Inc. at the current share price and the inputted number of shares is $11.3 billion.

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