Will FactSet Research (FDS) Beat Earnings Estimates?

FactSet Research Systems Inc. FDS is set to report fiscal fourth-quarter 2014 results on Sep 16, 2014. Last quarter, the company posted a negative earnings surprise of 2.38%. It is also worth noting that FactSet has underperformed the Zacks Consensus Estimate in three out of the four preceding quarters with an average negative surprise of 2.17%.

Let us see how things are shaping up for this announcement.

Factors this Past Quarter

FactSet reported mixed third-quarter results. While the company's bottom line missed the Zacks Consensus Estimate, the top line marginally beat the same. Nonetheless, the year-over-year comparisons were favorable.

Moreover, the company has a high client retention ratio of 93%, which is a positive catalyst. Also, Annual Subscription Value (ASV) increased compared with the year-ago quarter and the company added a good number of clients. Additionally, the share repurchase program will support its earnings per share.

FactSet continues with its product innovation and applications across its segments with special emphasis on financial services to gain more customers. Moreover, the company's acquisition of Revere Data and Matrix Data will help it to deliver innovative products to its clients and evolve as a global financial database company. It will also help FactSet to maximize value for its partners and provide customers with exclusive content sets.

Nonetheless, competition from Bloomberg L.P., Dow Jones & Company Inc., MSCI Inc. MSCI and Thomson Reuters, which are also 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 $1.31. Thus, the ESP is 0.00%.

Zacks Rank: FactSet Research Systems has a Zacks Rank #3 (Hold) 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 with a positive ESP and a favorable Zacks Rank that you may want to consider:

Micron Technology Inc. MU with Earnings ESP of +3.70% and a Zacks Rank #1 (Strong Buy)

BlackBerry Limited BBRY with Earnings ESP of +52.94% and a Zacks Rank #2 (Buy)