This fintech company earned $2.74 per share last quarter, handily beating analysts’ estimates of $2.74.
Fair Isaac Corporation (FICO)
From Wall Street Stock Forecaster
Fair Isaac is a buy. The company (Aggressive Growth Portfolio, TSINetwork Rating: Average;) is best known for its FICO Scores software. It lets lenders make better decisions about customer creditworthiness. The company also makes programs that help credit-card issuers reduce fraud and analyze the spending patterns of cardholders.
For the fiscal 2021 first quarter, ended December 31, 2020, Fair Isaac’s revenue rose 4.7%, to $312.4 million from $298.5 million a year earlier. That gain was largely due to strong sales of credit-scoring programs as low interest rates continue to spur demand for home mortgage loans.
Excluding one-time items, Fair Isaac earned $81.6 million, up 50.5% from $54.2 million. It spent $50.0 million on share buybacks in the quarter, so earnings per share gained 52.2%, to $2.74 from $1.80. That’s partly due to an $18.1 million drop in general expenses as the company eliminated corporate travel due to COVID-19 and cut its marketing and other costs. However, research spending rose $1.7 million in the quarter and accounted for 13.0% of revenue.
The stock trades at 41.5 times the projected fiscal 2021 earnings of $11.21 a share. That’s high, but still acceptable, as Fair Isaac should continue to benefit as it shifts its products to an online subscription model. The pandemic, which has forced employees to work from home, is also spurring demand for its fraud-detection products.
Fair Isaac is a buy.
Patrick McKeough, Wall Street Stock Forecaster, www.tsinetwork.ca, 888-292-0296, March 2021