FactSet Shares Slide 22% in a Month as Investors Reassess Growth Outlook for 2025

If you are weighing your next move on FactSet Research Systems, you are not alone. The stock has been on a wild ride lately, which is bound to spark both curiosity and caution. After a minor 0.2% uptick in the last week, shares are still hovering well below their highs, with a notable plunge of 22.4% over the past month. Year-to-date, FactSet is down 39.2%, and the longer-term picture is challenging as well, with returns of -36.2% over the past year and -25.5% over three years. Even stretching back five years, investors have seen the stock drop by 6.3%.

Some of these price swings can be pegged to shifting sentiment around the financial data industry. As markets recalibrate their expectations, FactSet’s reputation for stability has been put to the test. This has led investors to re-examine what they are truly paying for.

Here is where valuation comes in. By standard metric checks that look for undervalued stocks, FactSet scores a 3 out of 6, which is solid but not screamingly cheap. That number is your first clue that the company’s stock might have untapped value, or at least some leeway that has emerged after the recent drop. Up next, we are diving into how each valuation method stacks up. Later, I will share a more nuanced way to assess whether FactSet really deserves a spot in your portfolio.

Why FactSet Research Systems is lagging behind its peers

Approach 1: FactSet Research Systems Excess Returns Analysis

The Excess Returns model helps investors understand whether a company is generating returns above its cost of capital. In other words, it compares the profits FactSet makes on its invested capital with what it would cost to raise that capital, and projects whether this advantage is sustainable over time. This approach places special emphasis on profitability, growth prospects, and the safety margin for shareholders.

By this method, FactSet Research Systems impresses with an average return on equity of 28.29%, which is well above its cost of equity at $5.92 per share. The stable earnings per share are estimated at $19.94, based on weighted future Return on Equity estimates from four analysts. Meanwhile, the stable book value is anticipated to reach $70.49 per share, according to projections by six analysts. The current book value stands at $57.91 per share. This all results in an annual excess return of $14.02 per share, a strong position relative to peers in the industry.

The Excess Returns model values FactSet shares at $333.97 each. With the current share price sitting 13.3% below this assessed value, the stock appears undervalued at present levels, giving potential investors a reasonable margin of safety and room for upside if fundamentals hold steady.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for FactSet Research Systems.

Our Excess Returns analysis suggests FactSet Research Systems is undervalued by 13.3%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: FactSet Research Systems Price vs Earnings

The price-to-earnings (PE) ratio is a widely recognized way to value profitable companies like FactSet Research Systems, as it ties a company’s stock price directly to its earnings power. Investors often look to the PE ratio to quickly grasp how much they are paying for each dollar of earnings, making it a natural fit for evaluating more established, income-generating businesses.

What counts as a “normal” or fair PE ratio depends on factors such as expected earnings growth and business risks. Higher growth potential or lower perceived risk can justify a higher PE, while slower growth or more uncertainty tends to push that number down. For FactSet, the current PE sits at 18.3x, noticeably lower than both the Capital Markets industry average of 27.2x and the peer group average of 31.4x. This suggests investors expect less growth or see more risk here than in its rivals.

However, rather than relying solely on comparisons with broad industry averages, Simply Wall St uses a proprietary “Fair Ratio” that calculates what PE FactSet deserves by weighing several dimensions, including its own earnings growth, profitability, risk, industry characteristics and overall market cap. For FactSet, the Fair Ratio lands at 14.0x. By this yardstick, FactSet’s actual multiple (18.3x) is above its Fair Ratio, implying that investors are paying a premium relative to what its fundamentals alone might justify.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your FactSet Research Systems Narrative

As mentioned earlier, there is a smarter way to assess valuation: through Narratives. A Narrative is simply your own perspective or “story” about a company’s future, connecting what you believe about its business, growth or risks to a specific financial forecast, and ultimately to a fair value estimate.

Narratives take investing beyond the numbers. Instead of relying only on set formulas or broad averages, you can link your expectations (for example, how FactSet’s AI integrations or cost pressures might shape its revenue and margins) directly to your valuation. On Simply Wall St’s Community page, millions of investors can easily create, view and compare Narratives in just a few clicks, making this tool accessible for everyone, not just market professionals.

What makes this approach powerful is that Narratives help you decide if it’s time to buy, hold, or sell by comparing your Fair Value outcome to the current Price. When news breaks or new results come in, Narratives update automatically so your insights stay current.

For example, the most bullish Narrative for FactSet expects rapid GenAI-driven growth and a price target of $500, while the most cautious sees ongoing margin pressure and a target as low as $355, showing how different investors can see the same company but reach very different conclusions.

Do you think there's more to the story for FactSet Research Systems? Create your own Narrative to let the Community know!

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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