We look at a few leading FinTech and Information Services companies from a cash flow perspective. (Tickers mentioned: CSGP, FDS, INFO, MSCI, SSNC, VRSK).
I reflect on a few names I used to cover during my equity research days. For purposes of this exercise we review SS&C Technologies, Verisk Analytics, IHS Market, FactSet Research Systems, MSCI and CoStar Group from an historical cash flow perspective. It should be noted that four of the companies in the table below – SSNC, INFO, CSGP and MSCI – are led by founder CEOs. In the case of INFO, CEO Lance Uggla founded Markit, which subsequently merged with IHS (led by Jerre Stead) in 2016. These companies sported single-digit billion market caps (or below) when I published formal research on them 2007-2011. Great example of the time-value of money.
Each company listed in the table has performed well from both an EBITDA and cash flow generation standpoint. This financial performance is reflected in each company’s long-term total stock return performance.