FICO - Fair Issac Corporation

[Jurgis]

I think discussing selling should be done under general category and not here, unless you are talking about FICO specifically. :)

 

But for short generic thoughts:

 

Yeah, selling forever companies is a hard choice. On one hand, if you sell, you may miss runups due to crazy multiple expansion or - on more rational level - business expansions to some new subarea/etc. On the other hand, you could end up like Buffett with KO - dead money for 10 years from the top.

 

I don't know the answer. So far, I have held very few forever companies and sold a lot of potential forevers way too soon. I am trying to make my portfolio more forever-company heavy now and I feel that it will be very hard to hold and hold and hold.  :-\ Might be simpler with companies that you buy cheap and they stay somewhat cheap like BRK or FRFHF. Harder if you buy expensive and it stays/becomes even more expensive.

[TwoCitiesCapital]

http://blogs.wsj.com/totalreturn/2015/04/01/fico-gives-millions-a-path-toward-a-decent-credit-score/

[Guest Schwab711]

No one on Dataroma owns FICO. I found this to be really interesting.

[Guest Schwab711]

I think long-term, D&A - PP&E will be roughly $15m. $15m + Non-GAAP net income is probably the smoothest method to estimate current FCF.

 

So FCF = $135m + $15m = $150m

 

They are guiding for a 10% increase in earnings/FCF and I think there is reason to expect even higher actual results. Pretty excellent business selling for below market multiples (of course, with lots of adjustments). Their scores unit grew by >20% in 2015 and the rest of their business is chugging along.

 

MC: $2.73b

EV: $3.17b

 

P/FCF: 18.2x

EV/EBITDA: ~17x ($190m EBITDA w/ restructuring)

[JBTC]

http://www.pymnts.com/in-depth/2015/the-fall-of-the-fico-standard/

[Guest Schwab711]

FICO Scores operating margins +500 bps on 16.5% revenue growth (over first 9 months). They are now releasing more new products/features for this segment, and credit cards continue to add "free" FICO scores.

 

Add in some decent software/big data tool sales growth and you have an absolutely monster quarter. Normalized FCF likely exceeds $150m by a considerable %.

 

Startups in the space must be struggling. TransUnion (the only one that was working with startups) has hinted that they have abandoned projects with upstarts and have begun working with FICO again.

 

http://www.autonews.com/article/20160608/FINANCE_AND_INSURANCE/306089996/transunion-fico-launch-scoring-model-that-better-reflects-car-buyers

[Wabash02]

An old thread here but I was recently looking at FICO in Value line and noticed their ROE has doubled from 2011-2017 (~15% -> 30%) and is projected to be north of 40% in 2018 and 2019.  It does not appear that any material financial changes (issuing debt and buying back a huge amount of shares) accounts for this.  Anyone follow them and have context as to why this is happening?

 

[Libs]

This has been a great stock, but now I'm at a crossroads.

 

FICO is now >30 X FCF. What's the argument for holding? They're not growing THAT fast. Is a 15% grower with a big moat worth 30X, if you can sell it without a tax hit ( it's in my IRA)?

 

On the other hand, the market cap is only $7 billion. And selling great companies with long runways is usually stupid.

 

 

 

 

[Libs]

Up 35% in the 3 months since my last post. Amazing.

[matts]

Anyone looking at fico here?

 

down ~45% from the peak. looks like 31x 2021 (currently) estimated earnings