Exploring FactSet (FDS) Valuation After Market Rally on US-China Trade Easing

FactSet Research Systems (NYSE:FDS) shares climbed 3.9% in afternoon trading after President Trump softened his stance on the US-China trade dispute. His comments reduced market anxiety and encouraged broad investor interest in financial data companies like FactSet.

See our latest analysis for FactSet Research Systems.

It has been a bumpy ride for FactSet over the past year, with the recent jump following market-friendly trade remarks coming after months of pressure. A 1-year total shareholder return of -38% highlights just how much ground has been lost as investor sentiment shifted. Momentum is showing tentative signs of a turnaround, but the longer trend still favors caution.

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After such a sharp decline and a sudden rebound, the big question for investors is whether FactSet is now trading below its true value or if the recent jump simply reflects optimism already baked into the stock. Is there genuine upside left, or are markets already pricing in all the expected growth?

Price-to-Earnings of 18.2x: Is it justified?

FactSet Research Systems is currently trading at a price-to-earnings (P/E) ratio of 18.2x, with the last close at $286.67. This multiple is higher than the fair P/E estimate of 15.1x, but lower than both peer and industry averages. This creates a nuanced valuation picture that investors should consider carefully.

The price-to-earnings ratio measures how much investors are willing to pay for each dollar of current earnings. For a financial data company like FactSet, this is especially relevant because earnings growth, margins, and recurring business models directly drive long-term value. At 18.2x, the market seems to be pricing in some optimism for future earnings, though perhaps not excessive compared to industry standards.

Despite being above the estimated fair ratio, FactSet’s P/E is well below its closest peers (30x) and the broader US Capital Markets industry (25.9x). This means that, relative to these benchmarks, the shares may offer better value than much of the industry, though still trade at a premium to what would be considered fair by regression analysis. If investor expectations shift or company performance outpaces projections, the market could adjust its pricing accordingly.

Explore the SWS fair ratio for FactSet Research Systems

Result: Price-to-Earnings of 18.2x (OVERVALUED)

However, persistent negative returns and modest revenue growth could signal ongoing investor skepticism, which may limit the scope for a sustained price recovery.

Find out about the key risks to this FactSet Research Systems narrative.

Another View: SWS DCF Model Suggests Undervaluation

While the price-to-earnings ratio indicates that FactSet shares are trading above the fair ratio, our SWS DCF model takes a different stance. Based on this method, FactSet is priced about 13.7% below its estimated fair value. This suggests the shares could be undervalued at current prices. Does this mean market pessimism has gone too far, or is there underlying risk the model might miss?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out FactSet Research Systems for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own FactSet Research Systems Narrative

Whether you want to challenge this analysis or dive deeper into your own research, you can put together your own perspective on FactSet in just a few minutes, Do it your way

A great starting point for your FactSet Research Systems research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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