If EPS Growth Is Important To You, FactSet Research Systems (NYSE:FDS) Presents An Opportunity

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like FactSet Research Systems (NYSE:FDS). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide FactSet Research Systems with the means to add long-term value to shareholders.

See our latest analysis for FactSet Research Systems

FactSet Research Systems' Earnings Per Share Are Growing

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. We can see that in the last three years FactSet Research Systems grew its EPS by 6.7% per year. That might not be particularly high growth, but it does show that per-share earnings are moving steadily in the right direction.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. EBIT margins for FactSet Research Systems remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 20% to US$2.0b. That's a real positive.

You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

Fortunately, we've got access to analyst forecasts of FactSet Research Systems' future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are FactSet Research Systems Insiders Aligned With All Shareholders?

Owing to the size of FactSet Research Systems, we wouldn't expect insiders to hold a significant proportion of the company. But we do take comfort from the fact that they are investors in the company. Indeed, they hold US$15m worth of its stock. This considerable investment should help drive long-term value in the business. Even though that's only about 0.09% of the company, it's enough money to indicate alignment between the leaders of the business and ordinary shareholders.

It's good to see that insiders are invested in the company, but are remuneration levels reasonable? Well, based on the CEO pay, you'd argue that they are indeed. The median total compensation for CEOs of companies similar in size to FactSet Research Systems, with market caps over US$8.0b, is around US$12m.

FactSet Research Systems' CEO took home a total compensation package worth US$6.6m in the year leading up to August 2022. That is actually below the median for CEO's of similarly sized companies. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. Generally, arguments can be made that reasonable pay levels attest to good decision-making.

Should You Add FactSet Research Systems To Your Watchlist?

As previously touched on, FactSet Research Systems is a growing business, which is encouraging. Earnings growth might be the main attraction for FactSet Research Systems, but the fun does not stop there. Boasting both modest CEO pay and considerable insider ownership, you'd argue this one is worthy of the watchlist, at least. Even so, be aware that FactSet Research Systems is showing 2 warning signs in our investment analysis , you should know about...

Although FactSet Research Systems certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see insider buying, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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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.