Is Fair Isaac Corporation (FICO) stock a good buy?

This is a step-by-step stock review to answer the question, is Fair Isaac Corporation (FICO) stock a good buy?

This article will teach you how to use the 4Ms of investing. This will be a detailed walkthrough to show you how the 4Ms work and why they are important. If you are interested, you can log into Tykr to use the 4M Confidence Booster (Powered by OpenAI) which will allow you to complete a 4M Analysis in less than 60 seconds.

What are the 4Ms?

• MOS (Margin of Safety) – The MOS is the math part of investing which includes the Summary, Score, and MOS (Margin of Safety).
• Meaning – The meaning is the business model and how scalable the revenue streams are.
• Moat – The moat is how the business compares to other companies in the same Sector and Industry.
• Management – The management is the track record of the CEO.

What 4M score are we going for?

• 80-100 = High confidence – Yay! You should have high confidence buying this stock. It passes all 4M!
• 60-79 = Moderate confidence – Alert! There may be better stocks in the market. Only buy this stock if you truly believe the company will improve!
• 0-59 = Low confidence – Warning! There are better stocks in the market. Due to the low score, you should consider looking at other stocks.

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Table of Contents

The following links will direct you to key topics to help answer the question, is Fair Isaac Corporation (FICO) stock a good buy?

1. Fair Isaac Corporation History History
2. MOS
3. Meaning
4. Moat
5. Management
6. 4M Score
7. Is Fair Isaac Corporation (FICO) stock a good buy?

1. Fair Isaac Corporation Company History

When investing in stocks, it’s important to know the company’s history. This helps us understand the various revenue streams, if they acquired other companies, how they grew through difficult times, and how they separated themselves from the competition.

• Founding: Fair Isaac Corporation, commonly known as FICO, was founded in 1956 by engineer William R. Fair and mathematician Earl J. Isaac in San Rafael, California.
• Early Innovation: Initially focused on applying data analytics and mathematical algorithms to credit scoring and decision-making processes.
• FICO Score Introduction: Introduced the FICO Score in 1989, revolutionizing credit risk assessment for lenders and becoming the industry standard for credit scoring in the United States.
• Expansion of Services: Expanded its offerings to include a wide range of analytics and decision management solutions across various industries, such as finance, insurance, healthcare, and retail.
• Global Reach: Extended its operations globally, providing credit scoring and analytics solutions in over 100 countries.
• Acquisitions: Acquired several companies to enhance its product portfolio, including NAREX in 2003 (fraud detection) and Adeptra in 2012 (customer engagement and risk management).
• Technology Advancements: Invested in advanced technologies like artificial intelligence, machine learning, and big data analytics to improve its decision management solutions.
• Public Listing: Went public in 1986 and is traded on the New York Stock Exchange under the ticker symbol “FICO.”
• Industry Leadership: Established itself as a leader in predictive analytics, decision management, and fraud detection, serving a diverse range of clients from small businesses to large enterprises.
• Recognition and Awards: Received numerous accolades for its innovation and contributions to the financial industry, solidifying its reputation as a trusted provider of analytics solutions.

Fair Isaac Corporation’s history is marked by pioneering innovations in credit scoring and analytics, significant growth, and a commitment to leveraging technology to drive smarter business decisions.

2. MOS (Margin Of Safety)

When investing in a company, the first step is to look at the financials. Fortunately, Tykr does this for us automatically. The higher the score, the stronger the financials and the safer the investment. The higher the MOS, the higher the potential returns you can make.

• Summary: Watch
• Score: 61
• MOS: 1%

To see the most up-to-date Summary, Score, and MOS, please log into Tykr.

3. Meaning

When investing in a company, it’s important to know how a company makes money. A mature business model has multiple streams of revenue which allow the company to weather downturns in the economy.

Here is how Fair Isaac Corporation makes money:

• Credit Scoring: Generates revenue from providing FICO Scores, which are used by lenders to assess credit risk and make lending decisions.
• Analytics and Decision Management: Earns income by offering advanced analytics and decision management solutions, including predictive analytics and fraud detection.
• Software Licensing: Makes money from licensing its software solutions to businesses for risk management, compliance, and customer engagement.
• Consulting Services: Provides consulting services to help businesses implement and optimize FICO’s analytics and decision management systems.
• Fraud Detection and Prevention: Profits from services that help businesses detect and prevent fraud using advanced data analytics.
• Customer Engagement Solutions: Generates revenue from solutions that enhance customer engagement and improve customer experiences.
• Partnerships: Earns through strategic partnerships and collaborations with other technology and financial services companies.

Here are a few of the other companies that Fair Isaac Corporation has acquired over the years. This is important because a company will use a “Buy before build” philosophy to go to market faster and add additional streams of revenue. A company with more revenue streams has a more stable business model. Keep in mind, that most companies don’t build new software because it takes too long to go to market and generate revenue.

• ZestFinance
• FICO’s Decision Management Solutions
• Adeptra
• NAREX

4. Moat

When investing in a company, it’s important to understand how a company ranks against other companies in the same sector and industry. Based on the Score, here is how Fair Isaac Corporation stacks up against other companies.

1. ServiceNow, Inc. (NOW) – 89
2. Paycom Software, Inc. (PAYC) – 89
3. Diebold Nixdorf, Incorporated. (DBD) – 78
4. OppFi Inc. (OPFI) – 78
5. Sprinklr, Inc. (CXM) – 72
6. Fair Isaac Corporation. (FICO) – 61

To see the most up-to-date Summary, Score, and MOS and each stock, please log into Tykr.

5. Management

When investing in a company, it’s important to understand who the CEO is, what they have accomplished in the past, and how they have helped this company grow. Good leaders typically have stronger cultures, less turnover, and better returns in the stock market.