FactSet Research Systems is a provider of financial data and analytics with a subscription-heavy business model, generating trailing twelve‑month operating cash flow of $726.3M and delivering a net profit margin of 21.5% as of the most recent period.
The company’s cash and profitability profile is a clear strength: operating cash flow (TTM) rose to $726.3M while net income (TTM) reached $597.0M, and operating cash flow has exceeded net income with an OCF/Net Income ratio of about 1.22 and a cash conversion ratio of 1.2997. Profitability remains robust with an operating margin of 25.8% and a return on equity of 27.3% (most recent), and capital structure is conservative with debt-to-equity of 0.0158 and interest coverage near 13.29x, supporting the company’s ability to service obligations.
Notable areas of caution include slowing top-line and per-share growth: the most recent diluted EPS growth eased to 11.2% and the latest reported revenue-per-share growth was 4.1%, indicating decelerating momentum versus prior multi-year peaks. There are also accounting and investment flow quirks to monitor — gross margin shows a pronounced outlier at -74.2% in the 2022 period, and investing cash flow (TTM) has become more negative, moving to -$392.8M (with an earlier extreme of -$2.03B in 2022), which could reflect larger acquisitions or timing of capital deployments.
The foundation of business quality and long-term value creation
FACTSET RESEARCH SYSTEMS INC has shown a steady multi-year increase in quarterly revenue, rising from about $231.8M in 2014-03 to $607.6M in 2025-11. Revenue has increased consistently in recent quarters: $570.7M (2025-02), $585.5M (2025-05), and $607.6M (2025-11), reflecting continued top-line expansion versus prior years when quarterly receipts were generally in the $300–$400M range. A clear upward inflection in revenue is observable beginning around 2020–2022 when quarterly revenue moved from the high $300M range into the $400–$500M range and continued higher thereafter.
Net income has grown overall but with more variability. After lower results in early 2022 (notably $74.9M for 2022-03), net income recovered and has trended upward into 2024–2025, with recent quarters of $144.9M (2025-02), $148.5M (2025-05), and $152.6M (2025-11). The most recent quarterly revenue was $607.6M and the most recent quarterly net income was $152.6M.
Why Growth Matters
Consistent revenue and earnings growth are the lifeblood of successful long-term investments. Companies that can grow their top line (revenue) and bottom line (net income) over many years demonstrate they have products or services customers value and are willing to pay for repeatedly.
Revenue Growth shows whether the company is expanding its market reach, gaining market share, or successfully launching new products.Net Income Growth demonstrates the company can convert that revenue into actual profits while managing costs effectively.
Look for steady, sustainable growth rather than erratic spikes. The best businesses compound earnings year after year, creating tremendous value for shareholders over time. Companies that can grow earnings faster than revenue are improving their profitability—a sign of operational excellence and competitive strength.
Year-over-year growth rates for revenue and earnings per share
Reading the Growth Rate Chart
This chart converts the absolute per-share figures into year-over-year percentage changes, making it easy to see whether growth is accelerating, decelerating, or reverting to trend — regardless of the company's absolute size.
Revenue per Share Growth (1-year, split-adjusted) measures how quickly the top line is expanding on a per-share basis. Sustained positive growth signals that the company continues to win customers and grow its addressable market.EPS Diluted Growth (1-year, split-adjusted) measures how quickly earnings are compounding for each shareholder. When EPS growth consistently outpaces revenue growth, operating leverage and margin expansion are at work.
Look for consistency, not just magnitude. A company that reliably grows EPS 10–15% per year is far more valuable than one that alternates between 50% spikes and deep contractions. Negative EPS growth during a period of positive revenue growth is a red flag — costs are rising faster than sales. Quarters where both lines converge near zero or go negative deserve close scrutiny.
How revenue converts to net income for the most recent annual period
Over the period Sep 2021 to Aug 2022, Factset Research Systems Inc converts approximately -74¢ of every revenue dollar into gross profit (gross margin: -74.2%).After accounting for operating expenses and taxes and expenses, the company retains 21.5% as net profit margin, resulting in $0.40B in net earnings.
Period Information
Report Type: Annual (10-K)
Period: Sep 2021 to Aug 2022
Analyzing long-term margin stability and competitive positioning
FACTSET RESEARCH SYSTEMS INC's profitability by operating and net margins has been relatively stable in recent years, with operating margins in the mid-to-high 20% range across the last reported periods and net profit margins clustering around the low-to-mid 20s. Historically, there are higher and lower outliers (operating margin as high as 61.4% in 2014 and net margin up to 30.1% in 2016), but the most recent operating margin (25.8%) and net profit margin (21.5%) sit near the company's recent multi-year levels rather than those earlier extremes.
Gross margin shows a clear inflection in the latest reported quarter: after a series of positive gross margins between roughly 51% and 66% in prior years, the 2022-08-31 period reports a negative gross margin of -74.2%, a marked departure from historical levels. The most recent Gross Margin was -74.2%, Operating Margin was 25.8%, and Net Profit Margin was 21.5%.
Understanding Profit Margins
Between Sep 2021 and Aug 2022, Factset Research Systems Inc converts every dollar of revenue through the following stages:
Sustainable competitive advantages reveal themselves through consistently superior profit margins over extended periods. Companies with durable economic moats maintain pricing power and operational efficiency that competitors struggle to match.
A sign of durable competitive advantage is earning sustained higher margins than competitors.Look for margins that remain stable or improve over time, especially during economic downturns. Declining margins may signal increasing competition, pricing pressure, or deteriorating business fundamentals.
Comparing reported earnings to actual cash generation
Over the trailing periods shown, FACTSET RESEARCH SYSTEMS INC displays a steady upward trend in both net income and operating cash flow. Net income (TTM) rose from the low hundreds of millions in the early 2010s to $597.0M most recently, while operating cash flow (TTM) climbed from roughly $207.1M in 2011 to $726.3M in the latest period. In the last three annual observations the company shows year-over-year increases:
There is a clear pattern in recent quarters of operating cash flow exceeding reported net income, with the gap persisting and widening modestly from 2023 through 2025. Earlier in the series both metrics were substantially lower (net income around $171.0M and operating cash flow around $207.1M in 2011), with notable step-ups in cash generation beginning in the 2020–2021 timeframe and continuing thereafter. The most recent trailing-twelve-month operating cash flow was $726.3M and net income was $597.0M.
The Earnings vs. Cash Flow Gap
Reported earnings (Net Income) doesn't always reflect actual cash generation. Companies use accrual accounting, which recognizes revenue when earned and expenses when incurred—not when cash actually changes hands. This creates timing differences and opportunities for accounting discretion that can mask underlying business health.
Net Income (the "earnings" number) can be influenced by non-cash items like depreciation, stock-based compensation, and changes in accounting estimates.Operating Cash Flow, however, shows the actual cash the business generates from its core operations—a harder number to manipulate.
Trailing Twelve Months
What to Look For
Key Insight: Companies with durable competitive advantages typically show operating cash flow that meets or exceeds net income over time, demonstrating they convert accounting profits into actual cash that can be returned to shareholders or reinvested in the business.
Measuring management's efficiency at generating profits from shareholder capital
FACTSET RESEARCH SYSTEMS INC's return on equity has remained well above conventional "strong" thresholds but shows a gradual downward trend in recent years. After a series of high ROE readings in the mid-2010s (peaking at 65.5% in 2016), the metric declined through 2019–2020 and settled into the high-20% range over the last few quarters. The last four annual period-ends show ROE of 29.8% (2022-08-31), 28.9% (2023-08-31), 28.1% (2024-08-31) and 27.3% (2025-08-31), indicating small but consistent year-over-year decreases recently.
The most recent observed RETURN_ON_EQUITY for FACTSET RESEARCH SYSTEMS INC was 27.3% as of period ending 2025-08-31.
The Gold Standard of Profitability
Return on Equity (ROE) is a powerful measure of how effectively a company's management is using the money shareholders have invested. Calculated by dividing Net Income by Shareholders' Equity, it reveals how much profit is generated for every dollar of equity capital.
A consistently high ROE (typically above 15-20%) is often the signature of a "quality" business with a durable competitive advantage. It indicates that the company can generate high returns on its own capital, which it can then reinvest at these high rates to compound value over time.
What to Look For:
How the company generates and deploys its cash
FACTSET RESEARCH SYSTEMS INC shows a steady rise in trailing twelve‑month operating cash flow over the past several years, increasing from $700.3M at 2024-08-31 to $726.3M at 2025-08-31.
Investing cash flow has become more negative in the most recent year, moving from -$144.3M at 2024-08-31 to -$392.8M at 2025-08-31; an earlier extreme investing outflow is visible at -$2.03B on 2022-08-31.
Financing cash flow has been consistently negative across the series, with peak outflows around mid‑2023 (about -$632.0M) before moderating into 2024–2025, though the latest TTM financing outflow is slightly larger than the mid‑2025 reading.
Key Findings: The company is generating increasing operating cash while deploying larger cash outflows to investing and maintaining negative financing cash flow overall.
Understanding Company Strategy
Capital allocation refers to how management decides to spend and invest the company's cash. Analyzing the three primary categories of cash flow reveals a company's true operational strategy:
What to look for: Is the company bootstrapping (funding growth solely from operating cash)? Are they borrowing to fund aggressive expansion or dividends? Or are they capital raising by issuing new shares, potentially diluting your ownership? A healthy, mature company typically generates strong operating cash, moderately invests in growth, and returns the surplus to shareholders through financing activities.
Trailing Twelve Months
Net assets attributable to each share — the accounting floor of intrinsic value
Why Book Value per Share Matters
Book value per share is the net worth of the company — total assets minus total liabilities — divided by shares outstanding (split-adjusted). It represents the theoretical liquidation value per share if every asset were sold and every liability repaid at balance-sheet carrying values. It is the accounting foundation upon which much of equity valuation is built.
A steadily rising book value per share is one of the most reliable signals of compounding wealth creation. It means the company is retaining earnings and building net worth faster than it is returning capital or eroding it. Warren Buffett famously tracked Berkshire Hathaway's book value per share for decades as his primary measure of intrinsic value growth.
Context is essential. Asset-heavy businesses (banks, manufacturers, utilities) should be judged by book value more directly than asset-light businesses (software, consumer brands), where intangible assets like intellectual property and customer loyalty may far exceed their balance-sheet carrying values. A company trading at a large premium to book value is not necessarily overvalued — it may simply possess competitive advantages that accounting rules do not capture. Conversely, a declining book value per share — especially over multiple years — is a serious warning sign of capital destruction.
How much of the company is financed by debt versus shareholders' equity
Reading the Debt-to-Equity Ratio
The debt-to-equity (D/E) ratio compares total financial debt to shareholders' equity. A ratio of 1.0 means the company has borrowed one dollar for every dollar of equity; a ratio of 2.0 means it has borrowed twice as much as it owns. Financial leverage amplifies both returns and risk: in good times, debt turbocharges equity returns; in bad times, it accelerates losses and can threaten solvency.
Trends matter more than a single number. A rising D/E ratio can mean the company is taking on debt to fund growth — potentially value-creating if returns exceed the cost of capital. But it can also mean equity is being eroded through losses or that the business is borrowing simply to sustain operations. A falling D/E ratio generally reflects strengthening financial health: earnings are being retained, debt maturities are being paid down, or both.
Industry norms vary enormously. Capital-intensive sectors (utilities, real estate, financials) routinely carry high D/E ratios that would be alarming in, say, a technology company. Always compare against sector peers. As a rough rule of thumb, a D/E above 2× in a cyclical business warrants careful scrutiny of interest coverage and refinancing risk.
Short-term liquidity — can the company cover its near-term obligations?
Liquidity: Can the Business Pay Its Bills?
The current ratio is calculated as current assets divided by current liabilities. A ratio of 1.5 means the company has $1.50 of short-term assets — cash, receivables, inventory — for every $1.00 of obligations due within the next twelve months. It is the most direct measure of near-term financial resilience: can the business meet its obligations without needing to raise new capital or sell long-term assets at a discount?
A ratio above 1.0 is generally healthy, meaning current assets exceed current liabilities. A ratio consistently above 2.0 may indicate the company is holding excess cash or inventory that could be deployed more productively. A ratio below 1.0 is a warning sign — the company is relying on future cash generation or external financing to cover its near-term obligations, which is manageable in normal conditions but dangerous during a downturn.
Trends and context matter.A declining current ratio isn't always alarming — highly efficient businesses (e.g., large retailers with reliable daily cash flows) often run leaner balance sheets intentionally. Conversely, a rapidly rising current ratio can signal slowing sales causing inventory to build, or customers taking longer to pay. Always compare the trend against industry peers and cross-reference with the cash flow statement to assess whether the business is genuinely liquid or just holding non-cash current assets.
How much the market is paying for each dollar of company earnings
FACTSET RESEARCH SYSTEMS INC's trailing twelve-month price-to-earnings ratio has declined over the past three reported year-ends, moving from 43.3x on 2022-08-31 to 37.0x on 2023-08-31, then 31.5x on 2024-08-31, and most recently 24.5x on 2025-08-31. The most pronounced inflection in this period was the peak at 43.3x in 2022, followed by a steady contraction through the subsequent quarters.
Over the longer series, the P/E has ranged roughly between the low teens/high teens and the low 40s, with earlier troughs around 19.4x–20.8x (2011–2016) and intermittent peaks in the mid-30s (2018, 2021). The most recent Price-to-Earnings (P/E) ratio was 24.5x as of the period ending 2025-08-31.
What Is the PE Ratio?
The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics in investing. It divides the current stock price by the company's earnings per share (EPS), revealing how much investors are willing to pay for each dollar of earnings. A high PE can signal that the market expects strong future growth, while a low PE may suggest undervaluation—or reflect genuine concerns about the company's prospects.
Context matters:PE ratios vary significantly across industries. High-growth technology companies routinely trade at PE ratios above 30x or 40x, while mature, low-growth sectors like utilities or financials often trade closer to 10–15x. Always compare a company's PE to its own history and its industry peers, not just an absolute number.
What to Look For:
Key Insight:The PE ratio is a snapshot of market sentiment and expectations. Tracking it over time alongside earnings trends reveals whether the market's valuation has expanded or contracted—and whether that change is justified by fundamentals.