FAIR ISAAC CORP. $45.42 (New York symbol FICO; TSINetwork Rating: Average) (415-472-2211; www.fairisaac.com; Shares outstanding: 35.5 million; Market cap: $1.6 billion; Dividend yield: 0.2%) makes FICO Scores, the computer program that dominates the market for software that businesses use to evaluate customer creditworthiness. The company is also profiting by selling software that helps credit card issuers control fraud and analyze their clients’ spending patterns.
In the three months ended December 31, 2012, Fair Isaac’s earnings per share before one-time items fell 6.4%, to $0.88 from $0.94. But that still beat the consensus estimate of $0.73. Revenue rose 11.5%, to $190.0 million from $170.3 million.
Revenue rose thanks to the contribution of recently acquired Adeptra, which makes systems that let businesses communicate with customers through a range of channels, including voice, instant messaging, mobile applications and email. However, Fair Isaac earned lower profit margins on Adeptra’s products, which depressed its earnings.
Fair Isaac continues to spend around 8% of its revenue on research. That lets it keep producing innovative new products that help it stay ahead of its competitors.
The company’s balance sheet is sound: it holds cash and securities of $90.8 million, or $2.56 a share. Its long-term debt of $455.0 million is a manageable 28% of its market cap.
Fair Isaac should earn $2.80 a share in 2013. The stock trades at 16.2 times that figure. That’s reasonable for a company with strong growth prospects and high research spending.
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