Latest news with #credit scoring
Yahoo
3 days ago
- Business
- Yahoo
Fair Isaac Corporation (FICO): A Bull Case Theory
We came across a bullish thesis on Fair Isaac Corporation on Compound & Fire's. In this article, we will summarize the bulls' thesis on FICO. Fair Isaac Corporation's share was trading at $1,335.29 as of August 13th. FICO's trailing and forward P/E were 52.24 and 37.17, respectively according to Yahoo Finance. TaLaNoVa/ FICO is a pioneering leader in credit scoring and analytics, best known for its FICO Score, which enables businesses to assess risk, optimize decisions, and manage credit efficiently. The company has built a strong financial foundation with exceptional margins, consistent growth, and shareholder-friendly practices, including meaningful share reductions and operating cash flows that consistently exceed net income. While FICO carries a notable amount of intangibles, its moderate leverage and disciplined capital allocation make it a highly resilient and efficient value-creation engine. Over the past decade, its credit scoring and analytics solutions have demonstrated both market dominance and the ability to compound returns, reflecting a durable competitive moat. The company's Investment Readiness Score of 85.5 underscores its capacity to navigate economic cycles with precision, combining steady financial performance with strategic discipline. For investors, FICO presents a compelling proposition: a business with strong free cash flow generation, high margins, and a track record of consistent capital returns, all supported by a balance sheet that avoids excessive debt risk. Its operational efficiency, combined with a deep understanding of credit analytics, positions it to maintain leadership in a sector where data-driven insights are increasingly critical. Overall, FICO represents a uniquely attractive investment opportunity, offering both stability and growth potential, with multiple levers for enhancing shareholder value. The company's combination of analytical expertise, financial discipline, and capital efficiency creates a robust framework for long-term performance, making it a standout candidate for quality-focused investors seeking both resilience and high return potential. Previously, we covered a bullish thesis on Fair Isaac Corporation (FICO) by @FluentInQuality in May 2025, which highlighted FICO's market leadership, high margins, and disciplined capital allocation. The company's stock price has depreciated by approximately 11.12% since our coverage. The thesis still stands as FICO continues to generate strong free cash flow and maintain operational efficiency. Compound & Fire shares a similar perspective but emphasizes its Investment Readiness Score and resilience across economic cycles. Fair Isaac Corporation is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 68 hedge fund portfolios held FICO at the end of the first quarter which was 60 in the previous quarter. While we acknowledge the potential of FICO as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock. Disclosure: None.
Yahoo
30-07-2025
- Business
- Yahoo
FICO raises full-year profit forecast amid robust demand for its products
(Reuters) -Credit scoring giant Fair Isaac Corporation, widely known as FICO, raised its forecast for full-year adjusted profit on Wednesday, reflecting robust demand for its products. The company now expects $718 million, or $29.15 per share, in adjusted profit for 2025, compared to its previous forecast of $712 million, or $28.58 per share. Shares of the Bozeman, Montana-based company rose 1.5% in extended trading. FICO also reported a jump in third-quarter profit, buoyed by strong performance in its scoring business. While the broader lending environment has remained muted in recent years, FICO has benefited from strong pricing power given its dominant position in mortgage scores. The company is best known for its FICO score, the standard measure of consumer credit risk used by banks, credit card issuers, mortgage lenders and auto loan providers. Scores revenue, which includes its business-to-business and business-to-consumer scoring solutions, jumped 34% to $324.3 million in the third quarter. Software revenue rose 3% to $212.1 million in the quarter. FICO's total revenue jumped 20% to $536.4 million from a year earlier. FICO's adjusted profit for the quarter totaled $210.6 million, or $8.57 per share, compared with $156.4 million, or $6.25 per share, a year earlier. Investor sentiment around the company has weakened this year after coming under fire from Federal Housing Finance Agency (FHFA) Director Bill Pulte over FICO pricing. Earlier this month, the FHFA also allowed the use of VantageScore for mortgages sold to Fannie Mae and Freddie Mac. The move introduces direct competition to FICO in the mortgage market and has raised concerns about its ability to continue raising its pricing. VantageScore, founded in 2006, is a joint venture between credit bureaus Equifax, Experian and TransUnion. FICO stock has plunged 23.3% so far this year, underperforming the benchmark S&P 500 index. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
12-07-2025
- Business
- Yahoo
Why Fair Isaac Corporation Fell This Week
The FICO score inventor continues its war with the new administration's FHFA Director Bill Pulte. Pulte said this week that Fannie Mae and Freddie Mac will allow lenders to use a FICO alternative in scoring customers for mortgages. Fair Isaac has looked unbeatable in recent years, but it may be unable to raise prices as aggressively going forward. 10 stocks we like better than Fair Isaac › Shares of Fair Isaac (NYSE: FICO) fell this week, down 13.4% as of 12:10 p.m. ET on Thursday, according to data from S&P Global Market Intelligence. FICO has had somewhat of a monopoly on credit scoring, which has recently paved the way for large price increases, the most recent of which occurred in January. But this week, current Federal Housing Finance Agency (FHFA) Director Bill Pulte continued his mini-war against the company in the name of lowering costs for homeowners. This week, Pulte posted on X, formerly known as Twitter, that the current government-sponsored entities (GSEs) that buy mortgages, Fannie Mae (OTC: FNMA) and Freddie Mac (OTC: FMCC), will allow lenders to use something called VantageScore 4.0, a new potential FICO competitor, without having to build new infrastructure. VantageScore is a new credit score developed by the three major credit bureaus in 2017. It incorporates alternative data and some less stringent traditional data requirements to better score people, say, in rural areas or with less credit history. Fair Isaac stock fell hard in the wake of Pulte's tweets, as the two big GSEs guarantee about half of all mortgages in the United States. Therefore, if a significant portion of mortgages were now scored using an alternative, FICO could potentially lose market share relative to its current near-100% share. Even after this week's decline, Fair Isaac still trades at a whopping 70 times earnings, which means investors aren't exactly expecting huge declines in market share or revenue. This may be for a couple of reasons. First, VantageScore appears to be an option for a smaller subset of borrowers with limited credit history. It's also unclear how much lenders will want to use it, except in cases where the current FICO score excludes a borrower. Second, the FHFA had already mandated Fannie Mae and Freddie Mac to use VantageScore back in late 2022, while giving the homebuying market a three-year grace period to implement it. So, this week's news isn't really new information, although Pulte appears to have sped up the acceptance process while also making VantageScore easier to use on existing technology. Moreover, perhaps the allowance of VantageScore will hold off the threat of federal agencies turning to "bi-merge" scoring -- allowing mortgages to be scored by only two credit bureaus. Currently, the standard for GSEs is a "tri-merge" system for both FICO and VantageScore, which requires all three credit bureaus to run a score. There had been talk of allowing bi-merge to lower costs in recent years, which would also reduce the volume of FICO scores. So, perhaps this new competition will ward off that threat. Still, it does appear that the large price hikes FICO has implemented over the past few years, and most recently in January, will cease for now. Even though FICO scores cost only $4.95 today, the new FHFA director has previously called FICO's price hikes and seems keen to show how the administration is lowering costs. Before you buy stock in Fair Isaac, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Fair Isaac wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $694,758!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $998,376!* Now, it's worth noting Stock Advisor's total average return is 1,058% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of July 7, 2025 Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool recommends Fair Isaac. The Motley Fool has a disclosure policy. Why Fair Isaac Corporation Fell This Week was originally published by The Motley Fool
