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Fair Isaac Corp FICO

Morningstar Rating
$1,288.26 +41.70 (3.35%)
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Company Report

Fair Isaac Earnings: A Measured Start to Fiscal 2024

Though Fair Isaac maintained its fiscal 2024 outlook, its first fiscal quarter generally missed expectations. Revenue of $382 million, adjusted EBITDA of $188 million, and adjusted EPS of $4.81 were respectively 2%, 6%, and 5% below the FactSet consensus estimates. The culprit appears to be the firm’s scores segment. In addition, the firm’s software segment results were decent in our view, but growth did slow. Fair Isaac’s shares are trading at 54 times the 2024 consensus non-GAAP EPS estimate, which is a 2.4 times premium to the S&P 500 index. This 2.4 times premium is above its 1 year-average of 1.9 times. Overall, we believe Fair Isaac’s valuation leaves little room for error and thus expect a somewhat negative reaction in the firm’s stock. While we recognize many positive attributes of Fair Isaac’s business model, we view the firm’s shares as pricey and we will maintain our $810 fair value estimate and wide moat rating on Fair Isaac’s shares.

Price vs Fair Value

FICO is trading at a 54% premium.
Price
$1,246.56
Fair Value
$685.00
Uncertainty
High
1-Star Price
$2,815.70
5-Star Price
$363.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

FICO scores are an industry standard, and the firm has a long runway to increase prices given they are a small cost but critical offering for lenders.

Bears

Fair Isaac trades at a large premium to the credit bureaus and market overall, which could result in the stock seeing an outsize drop during a decline in sentiment.

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News

Trading Information

Previous Close Price
$1,246.56
Day Range
$1,267.381,290.92
52-Week Range
$650.001,336.39
Bid/Ask
$1,150.00 / $1,314.00
Market Cap
$32.02 Bil
Volume/Avg
146,160 / 174,208

Key Statistics

Price/Earnings (Normalized)
63.86
Price/Sales
21.12
Dividend Yield (Trailing)
Dividend Yield (Forward)
Total Yield
1.26%

Company Profile

Founded in 1956, Fair Isaac Corporation is a leading applied analytics company. Fair Isaac is primarily known for its FICO credit scores, which is a widely used industry benchmark to determine the creditworthiness of an individual consumer. The firm’s credit scores business accounts for most of the firm’s profits and consists of business-to-business and business-to-consumer offerings. In addition to scores, Fair Isaac also sells software primarily to financial institutions for areas such as analytics, decision-making, customer workflows, and fraud.
Sector
Technology
Industry
Software - Application
Stock Style Box
Mid Growth
Total Number of Employees
3,455

Competitors

Valuation

Metric
FICO
TRU
EXPN
Price/Earnings (Normalized)
63.8623.150.65
Price/Book Value
3.759.11
Price/Sales
21.123.915.58
Price/Cash Flow
58.5720.8422.39
Price/Earnings
FICO
TRU
EXPN

Financial Strength

Metric
FICO
TRU
EXPN
Quick Ratio
1.221.230.65
Current Ratio
1.311.540.65
Interest Coverage
6.840.7010.59
Quick Ratio
FICO
TRU
EXPN

Profitability

Metric
FICO
TRU
EXPN
Return on Assets (Normalized)
33.24%5.64%11.82%
Return on Equity (Normalized)
15.68%32.96%
Return on Invested Capital (Normalized)
48.26%8.65%17.16%
Return on Assets
FICO
TRU
EXPN
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