FICO Stock Risk & Deep Value Analysis
Fair Isaac Corp
DVR Score
out of 10
What You Need to Know About FICO Stock
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We ran FICO through our deep value framework — analyzing financial health, distress signals, competitive moat, and risk factors. Our risk assessment: Moderate. Here's what we found.
FICO Risk Analysis & Red Flags
What Could Go Wrong
While FICO boasts an incredibly strong moat, a prolonged and severe economic recession leading to a sharp decline in new credit originations could significantly impact its revenue streams, particularly within the transactional Scores segment, potentially leading to a temporary slowdown in its impressive growth trajectory.
Risk Matrix
Overall
Moderate
Financial
Medium
Market
Medium
Competitive
Low
Execution
Low
Regulatory
Low
Red Flags
- ⚠
Total debt of $3.639 billion, resulting in high net debt of $3.42 billion and negative shareholders' equity, though offset by strong cash flow.
- ⚠
While improving, the stock experienced a significant 48% decline earlier in 2026, indicating some market sensitivity or overvaluation concerns that may resurface.
- ⚠
Lack of granular current/quick ratio data in the provided research brief, though implied liquidity is strong via OCF.
Upcoming Risk Events
- 📅
Significant global economic recession impacting credit origination volumes
- 📅
Increased regulatory pressure on credit scoring models or data usage
- 📅
Unexpected deceleration in high-margin Scores segment growth
When to Reconsider
- 🚪
Exit if Scores segment revenue growth falls below 15% YoY for two consecutive quarters.
- 🚪
Sell if Debt-to-EBITDA (calculated or reported) consistently exceeds 3.5x.
- 🚪
Exit if overall operating margin contracts by more than 500 basis points YoY.
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Investment Thesis
FICO, a dominant force in credit scoring with an unparalleled economic moat, is demonstrating accelerating growth in its core Scores segment and expanding its analytics platform. Its recent Q2 FY2026 earnings beat, raised guidance, and aggressive share buyback program underscore its strong financial health and management's commitment to shareholder value, suggesting significant upside potential from its current valuation as the market re-rates this essential financial infrastructure provider.
Is FICO Stock Undervalued?
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FICO Price Targets & Strategy
12-Month Target
$1415.75
Bull Case
$1742.43
Bear Case
$809.00
Valuation Basis
Based on 35x forward P/E applied to $40.45 est. FY26 EPS = $1415.75
Entry Strategy
Dollar-cost average on dips below $980 (near recent support) or initiate position between $1000-$1050 with subsequent buys on pullbacks. Monitor for re-tests of the 50-day SMA.
Exit Strategy
Take 30-50% profit at $1400-$1500, with remaining position held for long-term re-rating towards $1700+. Implement a trailing stop-loss below the 200-day SMA or if Debt/EBITDA exceeds 3.5x.
Portfolio Allocation
8-12% for aggressive risk tolerance; 4-6% for moderate risk tolerance.
Price Targets & Strategy
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Is FICO Financially Healthy?
Valuation
P/E Ratio
37.63
EV/EBITDA
31.05
Profitability
Gross Margin
82.86%
Operating Margin
47.48%
Net Margin
31.89%
Return on Equity
145.71%
Revenue Growth
16.19%
EPS
$27.01
Balance Sheet
Current Ratio
0.83
Quick Ratio
0.78
Debt/Equity
2.54
Cash Flow
EBITDA
$1.01B
Other
Beta (Volatility)
1.28
Does FICO Have a Competitive Moat?
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🏰 Wide
Moat Trend
Expanding
Moat Sources
5 Identified
FICO's moat is exceptionally durable due to its unparalleled integration into the global financial infrastructure. The cost and risk associated with switching from FICO's established and regulatory-accepted scoring models are prohibitively high for most lenders, ensuring sustained market dominance for decades.
Moat Erosion Risks
- •Potential for significant regulatory shifts that mandate alternative scoring models or reduce reliance on traditional scores.
- •Emergence of a truly disruptive, widely adopted alternative credit assessment technology that can overcome FICO's network effects and switching costs.
FICO Competitive Moat Analysis
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FICO Market Intelligence
Sentiment & Insider Activity
Social Sentiment
Neutral to Bullish, especially following recent strong earnings and guidance.
Institutional Sentiment
Positive, with analysts adjusting targets upwards to reflect faster growth, despite some recent trims from specific firms.
Insider Activity (Form 4)
No specific Form 4 filings for buy/sell activity reported in available data for the last 90 days. The company's significant share buyback program (management-led) indicates confidence.
Options Flow
Normal options activity; no specific unusual put/call ratios or institutional block trades reported in the provided data.
Earnings Intelligence
Next Earnings
Estimated late July 2026 for Q3 Fiscal 2026
Surprise Probability
High
Historical Earnings Pattern
FICO has consistently beaten EPS estimates over the last 4 quarters. The stock typically reacts positively to earnings beats, particularly when accompanied by strong guidance or significant capital allocation announcements like share buybacks.
Key Metrics to Watch
Competitive Position
Top Competitor
TransUnion (TRU)
Market Share Trend
Stable to Gaining, with evidence (from TransUnion) suggesting FICO is leveraging its pricing power, indicating continued market leadership.
Valuation vs Peers
FICO typically commands a premium valuation to peers like TransUnion and Equifax due to its dominant market share, higher margins, and indispensable brand in credit scoring. At ~25x forward P/E, it is reasonable given its growth profile and moat.
Competitive Advantages
- •Proprietary algorithms and vast data assets (Intangible Assets/IP)
- •Deep entrenchment within global financial systems (Switching Costs)
- •Powerful brand recognition and regulatory acceptance (Brand Power)
- •Network Effects (lenders, borrowers, regulators all reliant on FICO standards)
Market Intelligence
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What Could Drive FICO Stock Higher?
Near-Term (0-6 months)
- •Q3 Fiscal 2026 Earnings Report (estimated late July 2026)
- •Continued accelerated growth in Scores segment and Platform ARR
- •Completion of authorized share buyback program
Medium-Term (6-18 months)
- •Expansion of FICO's cloud-based platform into new verticals/geographies
- •Strategic partnerships with major financial institutions for AI-powered analytics
- •Successful integration of advanced AI/ML into existing scoring models
Long-Term (18+ months)
- •Further entrenchment as the industry standard for credit risk and fraud management globally
- •Disruption of legacy credit assessment methods through data-driven innovation
- •Monetization of new data sources for alternative credit scoring
Catalysts & Growth Drivers
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What's the Bull Case for FICO?
- ✓
Sustained double-digit growth in both Scores and Platform revenue streams.
- ✓
Continued expansion of operating and net margins.
- ✓
Successful product launches leveraging AI/ML capabilities.
Bull Case Analysis
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How Fair Isaac Corp Makes Money
Fair Isaac Corp (FICO) is a data analytics company best known for creating the widely used FICO Score, a measure of consumer credit risk. The company primarily makes money by licensing these credit scores, along with sophisticated decision management software and analytics tools, to banks, financial institutions, and other businesses worldwide. These tools enable clients to make more informed decisions about lending, fraud detection, marketing, and customer management, essentially providing the critical infrastructure for risk assessment in the financial ecosystem.
Read Full Business Model BreakdownFAQ
What is the DVR Score for Fair Isaac Corp (FICO)?
As of April 30, 2026, Fair Isaac Corp has a DVR Score of 9.5 out of 10, placing it in the "Hidden Gem" category. This score is generated by our AI-powered deep value analysis framework that evaluates growth potential, financial health, competitive moat, and risk factors.
What is the market capitalization of Fair Isaac Corp?
Fair Isaac Corp's market capitalization is approximately $24.8B..
What is the risk level for FICO stock?
Our analysis rates Fair Isaac Corp's overall risk as Moderate. This assessment considers execution risk, market risk, financial risk, competitive risk, and regulatory risk. For a full breakdown, see the risk analysis section above.
What is the P/E ratio of FICO?
Fair Isaac Corp currently has a price-to-earnings (P/E) ratio of 37.6. This is above the market average, suggesting the stock may be priced for high growth expectations.
Is Fair Isaac Corp's revenue growing?
Fair Isaac Corp has reported revenue growth of 16.2%. The company is showing strong top-line momentum.
Is FICO stock profitable?
Fair Isaac Corp has a profit margin of 31.9%. This indicates strong profitability.
How often is the FICO DVR analysis updated?
Our AI-powered analysis of Fair Isaac Corp is refreshed regularly to incorporate the latest financial data, market conditions, and news. The most recent update was on April 30, 2026.
Important Disclaimer – Not Financial Advice
Deep Value Reports is an independent research platform for educational and informational purposes only. We are not financial advisors, investment advisors, or licensed professionals. The analysis, scores, and information provided on this page for FICO (Fair Isaac Corp) should not be construed as personalized investment advice, a recommendation to buy or sell any security, or an offer to provide investment advisory services.
All investments involve risk, including the potential loss of principal. Past performance does not guarantee future results. Always conduct your own research, consider your financial situation, and consult with a qualified financial advisor before making any investment decisions.