Today's stock market
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Energy led the market as the price of crude oil climbed above $70; the SPDR S&P Oil & Gas Exploration & Production ETF (NYSEMKT:XOP) increased 2.4%. Home construction stocks rose after an encouraging quarter from Lennar, and the iShares US Home Construction ETF (NYSEMKT:ITB) closed up 1.6%.
Two providers of information services to businesses reported expectation-beating quarterly results today. Shares of FactSet Research Systems (NYSE:FDS) and IHS Markit (NYSE:INFO) got opposite reactions from investors, though.
FactSet beats profit expectations but shares slip
FactSet Research Systems, a provider of data and research to financial institutions, reported fiscal third-quarter results that beat expectations, but saw its shares sell off 5.2% on slowing subscription growth. Revenue increased 8.9% to $339.9 million, in line with analyst expectations. Adjusted earnings per share grew 17.8% to $2.18, beating the analyst consensus by $0.05.
Organic annual subscription value grew 5.3%, which was below the 5.8% growth reported last quarter and toward the low end of the 4.9% to 6.5% range that the company is forecasting for the full year. Adjusted operating margin came in at 31%, also down from the 31.4% in Q2 and at the bottom of the 31% to 32.5% guidance range for the year. The company added 80 more clients in the quarter, a 1.6% sequential increase.
Despite slipping in some key metrics from the quarter before, FactSet expects that new products coming in the fourth quarter will keep it on track for the year. "We are making progress integrating and cross selling our acquisitions resulting in important wins this quarter, particularly within Analytics," said CEO Phil Snow in the press release. "We continue to innovate with the launch of the Open:FactSet marketplace and enhancing our risk offering. We believe we have a solid pipeline for the fourth quarter and expect to finish fiscal 2018 in our guidance range."
The softening in some key measures had the stock giving up what it had gained in the month before the report, but if FactSet delivers on its expectations for next quarter, it could be a temporary setback.
IHS Markit delivers nice profit gains
Business intelligence provider IHS Markit announced better-than-expected revenue and profit in its fiscal second quarter, and the stock jumped 4.8%. Revenue grew 11.3% to $1.01 billion and adjusted earnings per share increased 17.3% to $0.61. Wall Street was expecting the company to earn $0.57 per share on revenue of $974 million.
Recurring revenue grew 6% organically and non-recurring, organic revenue jumped 15%. On a segment basis, Transportation was the strongest business, growing 14% organically and 22% overall. Financial services revenue grew 9% and the resources and consolidated markets and solutions segments each grew 6%. Adjusted EBITDA margin improved 110 basis points year over year excluding currency effects.
"We reported our strongest organic revenue growth quarter since the merger while delivering solid margin expansion and earnings growth," said CEO Lance Uggla in the press release. (IHS and Markit merged in July 2016.)
Last month, IHS Market announced it's restructuring its financial services offerings by acquiring Ipreo, a software provider to customers in global capital markets, and divesting its MarkitSERV trade processing solution, expecting to boost its organic growth rate a percentage point to 5%-7%. Investors were happy today to see the organic growth from the company's existing businesses.