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Revenue Growth, Tax Cut to Drive FactSet's (FDS) Q4 Earnings


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FactSet Research Systems Inc. FDS is scheduled to report fourth-quarter fiscal 2018 results on Sep 25, before market open.

While the top line is likely to benefit from higher sales of analytics products, content and technology solutions and wealth management solutions, the bottom line is expected to benefit from lower tax rates.

We observe that shares of FactSet have rallied 38.8% in the past year, outperforming the industry 's rise of 27.5%.

Top Line Likely to Improve Year Over Year

The Zacks Consensus Estimate for the fiscal fourth quarter revenue stands at $346.44 million, indicating year-over-year growth of 6.1%. The top line is expected to be driven by higher sales of analytics products, content and technology solutions (CTS) and wealth management solutions along with an international price increase.

Growth across FactSet's risk offering and fixed income and equity products boosts its analytical suite. CTS look strong on the back of the recently launched Open FactSet Marketplace platform, which offers both core financial and alternative data sets. The company's wealth management business is performing well with workstation deployments across top-tier clients.

FactSet Research Systems Inc. Revenue (TTM)

FactSet Research Systems Inc. Revenue (TTM) | FactSet Research Systems Inc. Quote

In third-quarter fiscal 2018, total revenues rose 8.9% from the year-ago quarter to $339.9 million.

Earnings Likely to Grow on Tax Reform Policy

The U.S. Tax Cuts and Jobs Act ("TCJA"), which reduced corporate tax rates significantly, should benefit FactSet's earnings in the to-be-reported quarter. Notably, the consensus estimate for earnings per share (EPS) is pegged at $2.22, indicating year-over-year growth of 16.8%.

In the fiscal third quarter, adjusted earnings rose 17.8% from the year-ago quarter to $2.18 per share.

Our Model Suggests a Beat

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP . The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided, especially if they have a negative Earnings ESP. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

FactSet has an Earnings ESP of +0.68% and a Zacks Rank #2, a combination that increases the odds of an earnings beat.

Key Picks

Here are a few stocks from the broader Business Services sector that investors may consider, as our model shows that these also have the right combination of elements to beat on earnings in their upcoming releases:

Paychex PAYX has an Earnings ESP of +0.13% and a Zacks Rank #2. The company is slated to report first-quarter fiscal 2019 results on Oct 2. You can see  the complete list of today's Zacks #1 Rank stocks here .

Delphi Technologies DLPH has an Earnings ESP of +1.85% and a Zacks Rank of 3. The company is expected to report third-quarter 2018 results on Nov 14.

Gartner IT has an Earnings ESP of +4.50% and a Zacks Rank #3. The company is expected to report third-quarter 2018 results on Nov 1.

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Gartner, Inc. (IT): Free Stock Analysis Report

FactSet Research Systems Inc. (FDS): Free Stock Analysis Report

Delphi Technologies PLC (DLPH): Free Stock Analysis Report

Paychex, Inc. (PAYX): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Business , Earnings , Stocks
Referenced Symbols: IT , FDS , DLPH , PAYX



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