What it means
Finance professionals need reliable numbers, and gathering them from company filings, exchanges and brokers by hand is slow. FactSet collects and organises that information so users can search and analyse it quickly.
It is one of several major data providers, along with others such as Bloomberg and S&P Capital IQ. The platform typically covers company fundamentals (reported results and balance sheet items), market prices, analyst estimates, ownership data, news and economic series.
Users can screen for companies that meet certain criteria, such as a minimum growth rate or a maximum debt ratio. They can also compare companies side by side.
Many users pull data straight into Excel through an add-in. A formula in a spreadsheet cell requests a number, such as a company's revenue for a year, and the data updates automatically.
This links financial models to live data and saves time on manual entry. Beyond data, the service offers portfolio analytics, which measure performance, risk and attribution (what drove returns).
Asset managers use these tools to explain results to clients and to monitor risk. Corporate teams use them for investor relations, benchmarking against competitors and tracking who owns their shares.
Cost and quality are considerations. Subscriptions are usually priced per user and can be expensive, so smaller firms may use cheaper alternatives.
Even the best data providers can contain errors or use definitions that differ from a company's own, so users should check key figures against the original filings. For non-specialists, the point is simple: when a banker or analyst says a number came from FactSet, they mean it came from a commercial data source and was probably consolidated from multiple places.
Ask how it was defined, for example whether revenue is adjusted, and for what date the data applies. A good habit is to write the source and the date beside every figure in a report.
In practice
Real-world examples.
Example
An equity analyst needs the revenue growth of 30 competitors over five years. She builds a screen on the platform and exports the data to a spreadsheet in minutes. Doing it by hand from annual reports would have taken days, and she would have had less time to think about what the numbers meant.
Example
A corporate finance team preparing for an acquisition uses FactSet to see the valuation multiples at which similar companies have traded. They present the range to the board as a starting point for negotiation. Specific figures are then checked against the original filings, and any differences in how revenue or profit are defined are noted in the appendix of the presentation.
Example
An investor relations manager looks at the list of the company's largest shareholders and sees which funds have recently increased or reduced their holdings. She plans meetings with those who have been selling to understand their concerns, and she shares what she learns with the CFO before the next earnings call.
Case study
Seen in the real world.
Beacon Hill Advisory is an illustrative, fictional boutique that advises mid-sized companies on selling their businesses. It used to compile comparable company data by hand, taking two analysts nearly a week for each pitch.
The managing partner subscribed to a data platform of the FactSet type and trained the analysts to pull the figures directly into the valuation model. The time per pitch fell from five days to one, and the team could take on more clients.
In this fictional story, an analyst found that a competitor's revenue had been classified differently in the data than in its annual report. Checking against the filing prevented an error in front of a client. The lesson is that data platforms save time, but a human must still verify important numbers. The partner now requires every valuation page to carry a note saying where each figure came from and on what date it was taken. Clients appreciate the transparency, and the firm can answer quickly if someone asks why a number differs from a figure in the press.
Watch out
Common mistakes.
- Accepting a number from any data provider without checking it against the original company filing.
- Comparing figures from different providers without checking that definitions, such as adjusted earnings, match.
- Paying for a full subscription when the team only needs a few data items that could be obtained more cheaply.
Questions
People also ask.
What is FactSet used for?
It is used to research companies, screen investments, build financial models and analyse portfolios.
How is FactSet different from Bloomberg?
Both are financial data and analytics providers, with differences in coverage, tools and pricing, and many firms use more than one.
Can FactSet data be used in Excel?
Yes, users commonly link it to spreadsheets through an add-in so that models update with fresh data. It is wise to save a static copy of key figures for any report that will be circulated, so the numbers do not change after publication.
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