FactSet Research Systems (NYSE:FDS), a financial data and technology firm that offers software and information for investment management, is scheduled to release its Q3 earnings around June 23 (August fiscal year end). According to consensus estimates, earnings are projected to be $4.30 per share, a slight decline from $4.37 during the same period last year, while revenues are anticipated to rise by 5.1% year-over-year to $580.7 million. This growth is expected to be fueled by heightened demand from wealth and institutional buy-side clients, with organic subscription value – which refers to the recurring revenue the company anticipates generating annually from its existing subscription agreements – also likely to increase.
The company possesses a current market capitalization of $16 billion. Revenue for the past twelve months stood at $2.3 billion, and it was profitable in operational terms, reporting $711 million in operating profits and a net income of $543 million. Nevertheless, for those seeking potential upside with less volatility compared to individual stocks, the Trefis High Quality portfolio offers an alternative – having outperformed the S&P 500 and yielding returns exceeding 91% since its inception.
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FactSet Research Systems’ Historical Chances of Positive Post-Earnings Return
Some insights regarding one-day (1D) post-earnings returns:
- Over the past five years, there have been 20 earnings data points recorded, consisting of 10 positive and 10 negative one-day (1D) returns. In total, positive 1D returns occurred approximately 50% of the time.
- The percentage remains consistent at 50% if we analyze data for the last 3 years instead of 5.
- The median of the 10 positive returns is 3.6%, while the median of the 10 negative returns is -4.3%.
Further data concerning observed 5-Day (5D) and 21-Day (21D) post-earnings returns is compiled along with the statistics in the table below.
Correlation Between 1D, 5D, and 21D Historical Returns
A relatively less risky approach (although not beneficial if the correlation is low) is to assess the correlation between short-term and medium-term post-earnings returns, identify the pair with the strongest correlation, and execute the corresponding trade. For instance, if 1D and 5D exhibit the highest correlation, a trader can choose to go “long” for the next 5 days if the 1D post-earnings return is positive. Here is some correlation information based on a 5-year and 3-year (more recent) time frame. Note that the correlation 1D_5D refers to the relationship between 1D post-earnings returns and the subsequent 5D returns.
Discover more about Trefis RV strategy that has outperformed its all-cap stocks benchmark (a combination of the S&P 500, S&P mid-cap, and Russell 2000), generating strong returns for investors. Additionally, if you’re looking for potential upside with a smoother experience compared to an individual stock like FactSet Research Systems, consider the High Quality portfolio, which has surpassed the S&P, achieving over 91% returns since inception.
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