FDS — a 47-year-old financial data franchise trading at a 15× P/E

Stock: FactSet Research Systems (NYSE: FDS) | Sector: Financial Data & Analytics | Market cap: $8.59B 1

Price (Jun 15, 2026 close): $235.86 | 52-week range: $185.00–$453.41 | YTD change: −43.83% 1

Why this stock passed the screen today

Six candidates — FDS, VEEV, ROP, TYL, IDXX, WST — entered this screen. Only FDS cleared every gate.

Criterion	FDS result	Pass?
ROE > 15% — FY2023	31.73% (avg-equity method) 2	✅
ROE > 15% — FY2024	30.41% 2	✅
ROE > 15% — FY2025	29.13% 2	✅
FCF positive — all years	$491M / $617M / $683M TTM 2	✅
Valuation reasonable	Trailing P/E 15.17× vs 5-yr avg 33.93× 1	✅
VEEV, ROP, TYL	ROE below 15%	❌
IDXX, WST	ROE passed but P/E 41–44×	❌

ROE methodology note: All FDS ROE figures above use average shareholders' equity for the period, consistent with StockAnalysis's reported methodology. SEC XBRL period-end ROE (which uses only ending equity as the denominator) yields slightly lower but directionally identical figures — FY2023: 28.90%, FY2024: 28.09%, FY2025: 27.31%. Both methods confirm each year cleared 15% by a wide margin. 3 2

Trailing P/E

15.17×

FCF Yield

7.95%

ROE (FY2025)

29.13%

52-wk Decline

−50.6%

Short Interest

15.84%

Peer P/E Median

27.52×

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What FactSet actually sells

FactSet is a B2B financial data platform, not a consumer product. It was founded in 1978, headquartered in Norwalk, CT, and employs roughly 12,800 people serving approximately 9,100 institutional clients. 4

Revenue arrives almost entirely as Annual Subscription Value (ASV) — a locked-in, auto-renewing fee that institutional clients pay to access workstations, portfolio analytics tools, data feeds (Content & Technology Solutions, or CTS), wealth management modules, and an expanding set of AI-enabled solutions. 4

The split between buyer types matters for understanding the bear thesis: roughly 82% of ASV comes from buy-side clients — asset managers, hedge funds, private equity firms — and 18% from sell-side investment banks. 4 Sell-side is the segment most exposed to AI automation (research support, deal screening, back-office); buy-side is stickier because portfolio analytics workflows are deeply embedded in daily operations.

FactSet prices its seats at $12,000–$24,000 per user per year, positioned below Bloomberg Terminal ($24,000–$27,600) but above Refinitiv Eikon/Workspace ($3,600–$22,000). 5 For buy-side quant researchers specifically, FactSet's structured point-in-time data and factor library are considered the strongest in the category at that price point. 5

ROE deep-dive: 27–32% for three consecutive years

Fiscal year	Net income	Avg. shareholders' equity	ROE (avg-equity)	ROE (period-end)
FY2023 (ended Aug 31, 2023)	$468.2M	$1,475M	31.73%	28.90%
FY2024 (ended Aug 31, 2024)	$537.1M	$1,766M	30.41%	28.09%
FY2025 (ended Aug 31, 2025)	$597.0M	$2,049M	29.13%	27.31%

ROE has been declining roughly 150 basis points per year — not because earnings are falling, but because net income growth (+17.95% in FY2023, +14.73% in FY2024, +11.15% in FY2025) has been outpaced by equity accumulation, as confirmed by SEC XBRL filings and StockAnalysis balance sheet data. 3 2 Shareholders' equity grew from $1,016M in FY2021 to $2,186M in FY2025, a 110% increase in four years. 6 The trend is dilutive to ROE but not a sign of deteriorating business performance.

Free cash flow: $617M last full year, $683M TTM

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Period	Revenue	FCF	FCF margin	FCF per share
FY2021	$1,591M	$494M	31.0%	$12.81
FY2022	$1,844M	$487M	26.4%	—
FY2023	$2,086M	$586M	28.1%	—
FY2024	$2,203M	$615M	27.9%	—
FY2025	$2,322M	$617M	26.6%	$16.09
TTM	$2,401M	$683M	28.4%	$18.07

At today's $8.59B market cap, TTM FCF of $683M implies a 7.95% FCF yield — the highest in FDS's recent history and one of the highest in the financial data sector. 1

The FY2022 FCF dip is attributable to the $1.84B acquisition of CUSIP Global Services (closed Jan 2022), which inflated operating costs temporarily. FCF has since recovered and compounded to new highs each year since. 2

Valuation: the central thesis in numbers

P/E vs. 5-year historical average

Year	Trailing P/E
FY2021	36.70×
FY2022	42.28×
FY2023	36.25×
FY2024	30.40×
FY2025	24.01×
5-yr simple avg	33.93×
Current (Jun 15, 2026)	15.17×

The current trailing P/E of 15.17× sits 55.3% below the 5-year average of 33.93× (source: StockAnalysis annual P/E data 1). The compression is real: FY2025 revenue grew 5.4%, net income grew 11.2%, and full-year guidance was raised — yet the stock is priced at less than half its historical multiple. 7

P/E vs. sector peers (financial data & analytics)

Company	Ticker	Trailing P/E	EV/EBITDA
Moody's	MCO	32.58×	—
MSCI	MSCI	34.98×	—
Verisk Analytics	VRSK	27.52×	18.40×
TransUnion	TRU	18.71×	—
S&P Global	SPGI	26.85×	—
Peer median	—	27.52×	18.40×
FactSet	FDS	15.17×	10.83×
FDS discount to median	—	−44.9%	−41.1%

The peer table draws from individual StockAnalysis statistics pages. 8 9 10 11 12 FDS is the smallest company in its peer group at $8.59B — next smallest is TransUnion at $12.98B — and trades at a discount on every valuation metric listed. 1

Additional valuation metrics

Metric	Value
Forward P/E	12.78× 1
P/B	4.06× 1
P/FCF	12.58× 1
PEG (trailing)	1.82 1
FCF yield	7.95% 1

At 12.78× forward P/E, the market is pricing FDS as though earnings will decline materially. Current FY2026 guidance calls for adjusted diluted EPS of $17.25–$17.75, up from $16.98 in FY2025. 4

Revenue and earnings trajectory

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Revenue has grown every year for 45+ consecutive years, per StockAnalysis FY2021–TTM income statement data. 2 The CAGR from FY2021 to TTM is approximately 8.6%, with growth rates decelerating from 15.9% (FY2022) to 5.4% (FY2025) as the CUSIP acquisition anniversary effects faded. 4

The most recent quarter (Q2 FY2026, ended Feb 28, 2026) showed GAAP revenues of $611.0M, up 7.1% year-over-year — an acceleration from Q1's pace. 4 Organic ASV reached $2,449.1M (+6.7% YoY) as of Feb 28, 2026. 4

The one note of caution: GAAP net income fell 8.1% in Q2 FY2026, and adjusted operating margin compressed from 37.3% to 35.0%, reflecting higher investment in AI infrastructure. 4 That is the cost side of the AI pivot, and it is real.

Key margin figures for context:

Metric	FY2021	FY2023	FY2025	TTM
Gross margin	50.6%	53.3%	52.7%	51.9%
Operating margin	29.8%	30.2%	32.2%	31.2%
Net margin	25.1%	22.5%	25.7%	24.5%

Balance sheet health

FDS's balance sheet is conservative for a software-adjacent business that completed a large acquisition three years ago.

Item	Value
Total debt	$1,554M 6
Short-term debt	$0 (no near-term refinancing) 6
Cash & equivalents	$285M 6
Net debt	−$1,268M 6
D/E ratio	0.73 (peak was 1.67 at FY2022) 1
Interest coverage	13.57× 1
Current ratio	1.43 1

Shareholders' equity has doubled from $1,016M in FY2021 to $2,186M in FY2025, driven by retained earnings. 6 Tangible book value is negative (−$1,043M) due to $1,885M in intangibles and $1,287M in goodwill from the CUSIP acquisition, a normal feature of data platform businesses where value resides in proprietary datasets and relationships rather than hard assets. 6

Capital return: FDS repurchased $163M of stock in Q2 FY2026 at an average of $250.14/share and has $697.1M remaining under its current buyback authorization. 4 The dividend currently stands at $1.10/quarter ($4.40 annualized), yielding 1.87% at today's price — the 27th consecutive year of dividend increases. 1

Why the stock is down 50%: the three-event pile-up

Understanding the bear thesis requires tracing what actually happened, because market repricing of this magnitude almost always contains some information about real business risk.

Event 1 — September 18, 2025 EPS miss. Q4 FY2025 adjusted EPS came in at $4.05 versus Street consensus of approximately $4.13 — a small miss on the headline number. The real damage was FY2026 initial guidance: GAAP EPS of $14.55–$15.25 and organic ASV growth of only 4–6%, both below what analysts expected. The stock fell more than 23% in the days following. 7

Event 2 — February 4–5, 2026 sector selloff. Anthropic's enterprise AI agent launch triggered a broad software sector repricing. Software and services stocks shed approximately $830 billion in market value in two days; FactSet was caught in the wave and fell a further ~28.78% year-to-date by late February. 13 The specific fear: finance-focused AI agents could replicate research and workflow automation that FDS monetizes. 14

Event 3 — April 2026 CFO departure. Helen Shan's exit added another layer of uncertainty. With CEO Sanoke Viswanathan himself only 7 months into the role (took over Sep 2025), and with the CAIO and CTO also having joined just in March 2026, the entire C-suite had turned over within 7 months. 15 Joshua B. Warren (formerly CFO of Envestnet and Global Head of iShares at BlackRock) took over as CFO on April 13, 2026, and said on record: "As FactSet and its clients embark on a new chapter at the intersection of data, technology, and AI, the fundamentals are already strong." 15

Each event was meaningful. Together they produced a stock that trades at half what it did a year ago, with short interest at 15.84% of float (5.75M shares, 6.0 days to cover) — among the highest in the financial data sector. 1 High short interest can sustain downward pressure, but it also represents potential fuel for a short squeeze if catalysts flip the narrative.

The competitive moat — and where it's being tested

FactSet's primary moat is switching costs, not network effects or scale advantages in the way that credit rating agencies enjoy. 14

Three interlocking factors reinforce those switching costs:

Workflow depth: workstations and data feeds are embedded in analysts' daily front-office, middle-office, and back-office processes — switching means retraining teams and rebuilding proprietary models
Proprietary data: 47+ years of curated financial data, point-in-time estimates, ownership records, and supply chain mapping that cannot be replicated quickly
ASV retention: >95% ASV retention and 91% client count retention in the most recent quarter 4

Where the moat is being tested: AI agents that can perform equity research summaries or answer natural-language financial questions reduce the marginal value of a human analyst sitting at a FactSet terminal. The risk is not that clients cancel subscriptions overnight; it's that budget pressure over 3–5 years leads to seat count reduction per firm.

FactSet's response: 85,000+ beta users now have access to its AI tools, it launched FactSet AI for Banking (in partnership with Finster AI), and it has embedded Anthropic's Claude across core product workflows. 16 CEO Sanoke Viswanathan said in the Q2 FY2026 earnings call: "FactSet delivered another quarter of accelerating growth, driven by the strength of our data, the depth of our workflow integration, and the trust our clients place in us to run their most critical processes." 4

Risk factors: specific, with magnitude

Risk 1 — AI disruption of buy-side research workflows (high probability, medium magnitude over 3–5 years). If large AI vendors (OpenAI, Anthropic, Microsoft) successfully deploy finance-focused agents that perform research tasks at a fraction of FactSet's per-seat price, clients may reduce seat counts rather than cancel outright. A 10% reduction in buy-side ASV — which currently represents ~82% of total — would reduce annual revenue by roughly $200M and FCF by ~$55M, pushing the P/FCF back above 15×. The 15.84% short interest reflects exactly this concern. 14

Risk 2 — Margin compression from AI investment (near-term, visible). Q2 FY2026 adjusted operating margin fell 230 basis points YoY to 35.0%. 4 If the company continues to spend heavily on CAIO/CTO-led AI buildout without proportional revenue lift, GAAP EPS could decline further even as revenue grows.

Risk 3 — C-suite execution uncertainty (near-term). A new CEO (Sep 2025), new CFO (Apr 2026), new CAIO and CTO (Mar 2026) within 7 months means no member of the current senior team has guided the company through a full fiscal year. Strategy pivots, incentive misalignment, or execution missteps during the transition period carry above-average probability compared to a stable management team. 15

Risk 4 — Sell-side exposure to banking cycle (moderate). The 18% of ASV tied to investment banks is directly correlated with M&A and capital markets activity. A prolonged downturn in deal volumes would pressure renewal rates in this segment; banks have already been reducing data costs aggressively since 2022. 4

Risk 5 — Short interest pressure and negative sentiment loop. At 15.84% of float, any negative catalyst — a guidance cut, further analyst downgrade, or another AI product announcement from a competitor — could trigger accelerated selling and push the stock below the $185 52-week low. A sustained period below 15× P/E would signal that the market's impairment thesis is deepening, not easing. 1

Near-term catalysts

Q3 FY2026 earnings: July 1, 2026, before market open. This is the single most important near-term catalyst. A revenue beat and any improvement in GAAP net income vs. the Q2 decline of 8.1% would challenge the bear narrative. A guidance raise — the company already raised once after Q2 — would be particularly significant given that below-consensus guidance in September 2025 is what started the selloff. 4
Analyst consensus: Hold, with an average price target of $268.88 as of Jun 15, 2026. 1 The range is wide: BofA Securities rates it Underperform at $195, while UBS sits at the other end at $425. 1 Goldman Sachs, Barclays, and Wells Fargo all carry Sell/Underperform ratings. 13
AI product traction disclosure: The company has disclosed 85,000+ AI beta users and the FactSet AI for Banking alpha launch; any quantitative disclosure of AI-driven ASV — even directionally — could reset how analysts model future seat economics. 16

Decision framework

This is not a recommendation to buy or sell. What FDS presents is a structured decision problem with a clear hypothesis and three observable variables.

The bull case requires believing: (1) ASV retention at 95%+ holds through the AI transition — meaning clients are embedding FDS data into AI workflows rather than replacing FDS with AI; (2) the margin compression in Q2 is temporary and bounded; (3) the incoming C-suite executes rather than stumbles. If all three hold, a reversion to even half the historical discount — say 24×–25× trailing P/E — implies a stock price in the $370–$400 range, roughly 55–70% above today's close.

The bear case requires believing: AI seat pressure erodes ASV growth below 4% organically (below the low end of FY2026 guidance), margin pressure persists as FDS spends to compete, and the new management team loses clients during the transition. In that scenario, FCF could stagnate or contract, and the current 15× P/E may not be as cheap as it looks.

The variable to watch on July 1 is not just revenue but adjusted operating margin direction and organic ASV growth rate. If margin stabilizes at or above Q2's 35.0% and ASV growth stays above 6%, the bear thesis loses its near-term data support. If margin falls further — say to 33–34% — the bear case has new evidence.

Short interest at 15.84% and analyst consensus at Hold make this a stock where the next earnings report carries above-average informational weight for both sides.

Cover image: AI-generated illustration of a FactSet-style financial analytics terminal.