FactSet (FDS) Shares Decline Despite Solid Quarterly Results

FactSet Research Systems Inc. (FDS) experienced a significant stock decline on December 18, 2025, despite reporting first quarter fiscal 2026 earnings that exceeded analyst expectations. The financial data firm posted adjusted earnings per share of $4.51, beating the Zacks Consensus Estimate of $4.39 by 2.73%, and revenues of $607.6 million that surpassed estimates by 1.36%.

However, shares fell 6.02% to $278.29 as of 10:38 AM EST, reflecting investor concerns about margin compression and demand slowdown that overshadowed the positive earnings surprise.

FactSet Beats Q1 Estimates but Sees Margin Compression

FactSet’s first quarter results showed revenue growth of 6.9% year-over-year to $607.6 million, with organic revenues increasing 6.0% to $600.0 million. The company’s adjusted diluted EPS of $4.51 represented a 3.2% increase compared to $4.37 in the prior year period.

Organic Annual Subscription Value (ASV) reached $2,389.6 million at November 30, 2025, up 5.9% or $132.9 million year-over-year, though quarterly ASV growth was modest at just $6.6 million over the last three months.

Operating performance showed mixed results, with GAAP operating margin declining approximately 200 basis points to 31.6% from 33.6% in the prior year, while adjusted operating margin decreased 137 basis points to 36.2% from 37.6%.

The margin compression was primarily attributed to higher amortization of intangible assets, increased employee compensation costs, and elevated technology and third-party content expenses. Free cash flow provided a bright spot, increasing 49.5% to $90.4 million compared to $60.5 million in the prior year period.

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Shares Slide Despite Reaffirmed Fiscal 2026 Guidance

Despite the earnings beat, FactSet shares have underperformed significantly in 2025, declining 41.85% year-to-date compared to the S&P 500’s gain of 15.57%. The stock is trading near $278.29, well below analyst price targets that range from a low of $260.00 to a high of $430.00, with an average target of $334.06.

The company currently maintains a Zacks Rank #3 (Hold), suggesting shares are expected to perform in line with the market in the near future.

The market’s negative reaction appears driven by concerns about the company’s ability to sustain growth momentum amid margin pressures. While FactSet reaffirmed its fiscal 2026 guidance, projecting organic ASV growth of $100-150 million and adjusted diluted EPS of $16.90-$17.60, investors remain cautious.

The company’s trailing P/E ratio of 19.04 and forward P/E of 17.01 suggest relatively modest valuation, yet the stock’s 38.3% decline since the beginning of the year reflects persistent worries about competitive dynamics and the broader shift in AI investment narratives affecting financial data providers.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.