Is Now The Time To Look At Buying Fair Isaac Corporation (NYSE:FICO)?

By
Simply Wall St
Published
May 25, 2022
NYSE:FICO
Source: Shutterstock

Fair Isaac Corporation (NYSE:FICO) saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s take a look at Fair Isaac’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Fair Isaac

What's the opportunity in Fair Isaac?

Great news for investors – Fair Isaac is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is $636.15, but it is currently trading at US$391 on the share market, meaning that there is still an opportunity to buy now. However, given that Fair Isaac’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Fair Isaac look like?

earnings-and-revenue-growth
NYSE:FICO Earnings and Revenue Growth May 25th 2022

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of Fair Isaac, it is expected to deliver a relatively unexciting earnings growth of 9.1%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.

What this means for you:

Are you a shareholder? Even though growth is relatively muted, since FICO is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on FICO for a while, now might be the time to enter the stock. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy FICO. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed buy.

So while earnings quality is important, it's equally important to consider the risks facing Fair Isaac at this point in time. For example, we've discovered 3 warning signs that you should run your eye over to get a better picture of Fair Isaac.

If you are no longer interested in Fair Isaac, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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