Will FactSet Research (FDS) Miss This Earnings Season? - Analyst Blog

FactSet Research Systems Inc. FDS is set to report fiscal second-quarter 2014 results on Mar 18, 2014. Last quarter, it posted a negative earnings surprise of 1.61%. Let us see how things are shaping up for this announcement.

Factors this Past Quarter

FactSet is one of the leading providers of online integrated data-related products and services for the investment community (primarily bankers, investment managers and brokerage firms). FactSet continues to launch products and applications across its segments with special emphasis on financial services.

Moreover, the company has a high client retention ratio of 92% which remains a positive catalyst. Improvements in the financial sector will positively impact the company, going forward. Additionally, the fresh buyback program will support its earnings per share in the long run and ensure shareholders' loyalty.

Nonetheless, competition from Bloomberg L.P., Dow Jones & Company Inc., MSCI Inc. MSCI and Thomson Reuters, which are coming up with substitute products at competitive prices, is a headwind for the company.

Earnings Whispers?

Our proven model does not conclusively show that FactSet Research Systems is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate currently stand at $1.22. Thus, the ESP is 0.00%.

Zacks Rank: FactSet Research Systems has a Zacks Rank #2 (Buy) which when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

Stocks to Consider

Here are some companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat in the imminent future:

CLARCOR Inc. CLC with Earnings ESP of +21.43% and a Zacks Rank #3 (Hold)

Oracle Corp. ORCL with Earnings ESP of +1.49% and a Zacks Rank #3.