FactSet Research Systems Inc.FDSNYSE

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DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $389.81 per share(market-calibrated)

+105.1%

Upside to Fair Value

Current

$190.06

Pure Model

$415.39

Fair Value

$389.81

Bull Case

$529.81

Bear Case

$323.05

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: $415.39.

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.

↑

Margin expansion modeled

Current EBIT margin is 30.61% — below the sector mature average of 32.23%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $1.1B (30.61% margin).

→

Moderate revenue growth

Analyst consensus projects 5.57% revenue growth, fading to 2.50% by Year 10. Revenue reaches $3.7B (vs $2.3B today).

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $481.40/share (23.7x terminal FCF) while exit multiple gives $349.38/share (14.8x terminal FCF). The base case averages both methods.

🎯

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 80.97% indicates efficient cash generation. FCF reaches $1.1B by Year 10 (29.80% 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)82.22%

Debt Weight (D/V)17.78%

WACC Calculation

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

WACC = (82.22% × 7.77%) + (17.78% × 2.47%)

= 6.83%

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	$750M	$834M	$923M	$1.0B	$1.1B
Tax	$129M	$143M	$159M	$175M	$193M
NOPAT	$621M	$691M	$764M	$844M	$928M
+ Depreciation	$152M	$169M	$187M	$206M	$227M
- Capex	$78M	$76M	$73M	$68M	$55M
- Δ NWC	$13M	$15M	$18M	$15M	$9M
Free Cash Flow	$683M	$769M	$860M	$966M	$1.1B
Discount Factor	0.936	0.820	0.719	0.630	0.517
Present Value	$639M	$631M	$618M	$609M	$564M

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

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$1.1B

Terminal Growth Rate2.50%

WACC6.83%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$25.9B

PV of Terminal Value$13.4B

Exit Multiple Method

Year 10 EBITDA$1.3B

Exit Multiple (EV/EBITDA)12.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$16.2B

PV of Terminal Value$8.4B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$6.1B

PV of Terminal Value$13.4B

Enterprise Value$19.5B

(-) Net Debt$1.2B

Equity Value$18.3B

Shares Outstanding38M

Price per Share$481.40

Exit Multiple Method

PV of Projected FCFs$6.1B

PV of Terminal Value$8.4B

Enterprise Value$14.5B

(-) Net Debt$1.2B

Equity Value$13.2B

Shares Outstanding38M

Price per Share$349.38

Pure Model Fair Value

$415.39

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%
4.83%	$553.86	$603.97	$675.64	$730.74	$701.09
5.83%	$450.20	$476.32	$510.30	$556.31	$622.11
6.83%	$380.90	$396.36	$415.39	$439.39	$470.62
7.83%	$330.23	$340.14	$351.91	$366.12	$383.62
8.83%	$290.96	$297.68	$305.47	$314.59	$325.42

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

$323.05

70.0% vs current

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

Base Case

$415.39

118.6% vs current

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

Bull Case

$529.81

178.8% 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 Growth5.57%

Year 3 Revenue Growth5.68%

Year 5 Revenue Growth6.19%

Year 7 Revenue Growth4.72%

Year 10 Revenue Growth2.50%

Terminal Growth Rate2.50%

Margin & Efficiency

Current EBIT Margin30.61%

Terminal EBIT Margin32.23%

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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