FactSet drops after FQ4 EPS misses, earnings impacted by

Mid adult man checking financial information on a smart phone while doing his bookkeeping


FactSet Research Systems (FDS) was down by ~8% after reporting a miss on its FQ4 EPS, which were impacted by higher interest expenses from the company’s investment grade senior notes and outstanding term loan.

Non-GAAP EPS of $3.13 misses by $0.08 and revenue of $499.3M (+21.2% Y/Y) beats by $11.35M.

The financial data and analytics company issued its inaugural investment grade senior notes consisting of $500M principal amount of 2.90% senior notes due 2027 and $500M principal amount of 3.45% senior notes due 2032.

During the quarter, FactSet made a $125M pre-payment of the principal amount of the term loan. Aggregate repayment of the term loan to date is $250M.

Seeking Alpha Author BOOX Research had said that compared to the record 2021, more volatile macro conditions defined by persistent inflation and climbing interest rates have hit the operating environment for financial services.

Growth and earnings may underperform for the entire sector, but FDS may be a bit more vulnerable compared to the trading exchange operators or index providers that have a balancing source of sales momentum.

According to the author, who gives the stocks a Sell rating, the risks are tilted to the downside.

The stocks have lost ~16% of their value year-to-date:

For FY23, FDS expects revenues to be in the range of $2.100B to $2.115B vs. $2.04B consensus. EPS is expected to be in the range of $14.50 to $14.90 vs. $14.82 consensus.

The revenue estimates are below consensus, but earnings expectations are in line.

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