FactSet Research Systems Inc.FDSNYSE

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DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $489.84 per share(market-calibrated)

+120.3%

Upside to Fair Value

Current

$222.35

Pure Model

$520.14

Fair Value

$489.84

Bull Case

$659.35

Bear Case

$406.87

Market Reality Check

Model Terminal Growth

2.50%

Market-Implied Growth

0.50%

Calibrated Growth

1.80%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $520.14.

What's Driving This Ratingfor FDS

↓

CapEx normalizing toward maintenance

Historical CapEx is 3.17% of revenue (heavy investment phase). Model fades this to 1.50% by Year 10, freeing up ~$61M in annual FCF. This is the biggest driver of long-term cash flow improvement.

✓

Premium margins already priced in

EBIT margin of 39.82% is already well above sector average. The model holds this level — there's limited room for margin expansion to drive upside. Valuation depends primarily on revenue growth.

→

Moderate revenue growth

Analyst consensus projects 5.54% revenue growth, fading to 2.50% by Year 10. Revenue reaches $3.7B (vs $2.3B today).

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 200bps below the model's 2.50%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 81.34% indicates efficient cash generation. FCF reaches $1.4B by Year 10 (37.43% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.73

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)7.77%

Cost of Debt

Pre-tax Cost of Debt2.98%

Tax Rate17.19%

After-tax Cost of Debt2.47%

Equity Weight (E/V)84.40%

Debt Weight (D/V)15.60%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (84.40% × 7.77%) + (15.60% × 2.47%)

= 6.94%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$2.5B	$2.7B	$3.0B	$3.3B	$3.7B
EBIT	$976M	$1.1B	$1.2B	$1.3B	$1.5B
Tax	$168M	$187M	$206M	$228M	$251M
NOPAT	$808M	$900M	$994M	$1.1B	$1.2B
+ Depreciation	$152M	$169M	$187M	$206M	$227M
- Capex	$78M	$76M	$73M	$68M	$55M
- Δ NWC	$13M	$15M	$18M	$15M	$9M
Free Cash Flow	$869M	$978M	$1.1B	$1.2B	$1.4B
Discount Factor	0.935	0.818	0.715	0.625	0.511
Present Value	$813M	$799M	$779M	$763M	$701M

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$1.4B

Terminal Growth Rate2.50%

WACC6.94%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$31.6B

PV of Terminal Value$16.2B

Exit Multiple Method

Year 10 EBITDA$1.7B

Exit Multiple (EV/EBITDA)12.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$20.2B

PV of Terminal Value$10.3B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$7.7B

PV of Terminal Value$16.2B

Enterprise Value$23.9B

(-) Net Debt$1.2B

Equity Value$22.6B

Shares Outstanding38M

Price per Share$597.08

Exit Multiple Method

PV of Projected FCFs$7.7B

PV of Terminal Value$10.3B

Enterprise Value$18.0B

(-) Net Debt$1.2B

Equity Value$16.8B

Shares Outstanding38M

Price per Share$443.20

Pure Model Fair Value

$520.14

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.50%	2.00%	2.50%	3.00%	3.50%
4.94%	$686.37	$744.23	$825.81	$926.93	$889.69
5.94%	$562.87	$593.59	$633.23	$686.36	$761.26
6.94%	$479.25	$497.62	$520.14	$548.37	$584.80
7.94%	$417.61	$429.48	$443.53	$460.43	$481.14
8.94%	$369.58	$377.68	$387.03	$397.96	$410.89

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$406.87

83.0% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 0.91

Base Case

$520.14

133.9% vs current

• Analyst consensus
• Terminal growth: 2.5%
• Beta: 0.73

Bull Case

$659.35

196.5% vs current

• +25% vs analyst consensus
• Terminal growth: 3.0%
• Beta: 0.62

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Financial Services Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth5.54%

Year 3 Revenue Growth5.85%

Year 5 Revenue Growth6.19%

Year 7 Revenue Growth4.72%

Year 10 Revenue Growth2.50%

Terminal Growth Rate2.50%

Margin & Efficiency

Current EBIT Margin39.82%

Tax Rate17.19%

Historical Capex / Rev3.17%

Terminal Capex / Rev1.50%

NWC / Revenue10.00%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 12x EV/EBITDA (Financial Services sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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