Summary: ON SALE
Score: 16/20
MOS: 73%
Share Price: $452
Sticker Price: $1,702
Is FICO stock a good buy?
FICO is a data analytics company founded in 1956 and based in San Jose, CA.
The company was founded by Bill Fair and Earl Isaac. They met at Stanford University in the early 1950s. Fair was an engineer and Isaac was a mathematician. With a borrowed computer, $800, and a big idea, they founded Fair, Isaac and Co.
Before we dive into the financials, here is a little context on FICO…
The FICO score is a measure of consumer credit risk, which has become a fixture of consumer lending in the US.
Today, credit agencies calculate an individual’s credit score using a version of the FICO algorithm, developed in 1989 to serve as a standardized measure, according to FICO’s website. About 90% of lenders in the US use FICO scores to assess credit.
A FICO score takes several components into account, including:
- Payment history
- Amount owed
- Length of credit history
- How many times someone has applied for new credit
- Mix of credit types, including loans, credit cards, mortgages and more
So how does FICO make money?
FICO specifically offers credit scoring, debt collection and recovery, fraud protection, and compliance services delivered through technology. They primarily serve US credit card issuers, financial institutions, insurance companies, and retailers.
Looking on their website, here are some quick statistics:
- 2/3 of the largest banks in the world use FICO
- 96% of the largest banks in the US use FICO
- 600+ insurance companies use FICO
- 150+ health care companies use FICO
When looking at the “4 M’s” as referenced in the Tykr onboarding, FICO definitely has a large Moat. In fact, they really don’t have any major competitors.
Here is the latest news on the stock…
Zacks just reported the most recent EPS was $2.74 compared to the estimate of $2.44 share. This compares to an EPS of $1.80 a year ago. This is a great sign.
Simplewall.st just raised the next price target to $547, a 21% increase. Another great sign.
Here is the latest update on the financials…
Revenue by Quarter (Found on the Income Statement)
Q1 2020 = $307M
Q2 2020 = $313M
Q3 2020 = $374M
Q4 2020 = $312M
Revenues are decreasing from the previous quarter. Not bad but worth paying attention to.
Net Income by Quarter (Found on the Income Statement)
Q1 2020 = $58M
Q2 2020 = $64M
Q3 2020 = $59M
Q4 2020 = $84M
Net income increased significantly. This is a great sign.
EPS by Quarter (Found on the Income Statement)
Q1 2020 = 1.94
Q2 2020 = 2.15
Q3 2020 = 1.98
Q4 2020 = 2.74
EPS increased significantly as well.
Net Change in Cash (Found on the Cash Flow Statement)
Q1 2020 = $54M
Q2 2020 = $98M
Q3 2020 = $135M
Q4 2020 = $74M
The Net Change is Cash is decreasing.
Total Assets (Found on the Balance Sheet)
Q1 2020 = $1.55B
Q2 2020 = $1.56B
Q3 2020 = $1.66B
Q4 2020 = $1.58B
The Total Assets are decreasing slightly.
Total Liabilities (Found on the Balance Sheet)
Q1 2020 = $1.34B
Q2 2020 = $1.32B
Q3 2020 = $1.33B
Q4 2020 = $1.25B
The Total Liabilities are decreasing slightly which is good.
Total Debt (Found on the Balance Sheet)
Q1 2020 = $822M
Q2 2020 = $818M
Q3 2020 = $815M
Q4 2020 = $809M
The Total Debt is decreasing slightly which is good.
Total Equity (Found on the Balance Sheet)
Q1 2020 = $214M
Q2 2020 = $247M
Q3 2020 = $331M
Q4 2020 = $324M
The Total Equity is decreasing slightly.
With a score of 16/20, the income statement, cash flow statement, and balance sheet are very strong. When you look at the WHY page in Tykr, you can see the ROIC is 6/6, Equity Growth Rate is 2/3, the EPS Growth Rate is 3/3, and the Sales Growth Rate is 3/3. Although a few variables (Revenue, Cash, Assets, and Equity) are decreasing, the business is doing very well. Knowing they have very few competitors and strong financials, this is definitely a stock to take a look at.
—
The Summary, Score, and MOS of this stock may have changed since the posting of this review. Please login to Tykr to see up-to-date information.