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.
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Weekly adjusted close · Quarterly revenue & EPS · DVR score history
FICO Risk Analysis & Red Flags
What Could Go Wrong
FICO's significant pricing power in its Scores segment could be challenged if the rollout of FICO Score 10T faces material delays beyond Q4 FY2026 or if major GSEs/lenders adopt alternative scoring models more broadly than anticipated, potentially impacting the projected 60%+ Scores segment growth rate seen in Q2 FY2026 and jeopardizing its ~80% gross margin.
Risk Matrix
Overall
Moderate
Financial
Low
Market
Medium
Competitive
Medium
Execution
Low
Regulatory
Low
Red Flags
- ⚠
Elevated debt-to-equity ratio (historically >2.0, based on training data) due to aggressive share buybacks, though currently manageable with strong cash flow.
- ⚠
Potential for regulatory changes in credit reporting standards that could mandate alternative scoring models or limit FICO's data exclusivity.
- ⚠
Increasing competitive threat from open-source AI models or in-house data science teams developed by large enterprises for decisioning, potentially eroding FICO Platform's market share in customizable solutions.
Upcoming Risk Events
- 📅
Slower-than-expected adoption or significant delays in the FICO Score 10T rollout (H2 FY2026): This could impact the projected growth in mortgage-related score revenues and potentially lead to competitive pressure from alternative scoring models.
- 📅
Increased competitive pressure from VantageScore or large financial institutions developing sophisticated in-house decisioning models (Ongoing): This could cap FICO's pricing power and market share in specific segments of its Scores or Platform business, impacting revenue growth by 2-3% annually.
When to Reconsider
- 🚪
Exit if quarterly revenue growth decelerates to below 15% YoY for two consecutive quarters, indicating a loss of momentum in both Scores and Platform segments.
- 🚪
Sell if operating margin falls below 40% for two consecutive quarters, signaling a fundamental erosion of pricing power or cost structure issues (operating margins consistently in 40-50%+ range based on training data).
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Investment Thesis
If FICO successfully drives the widespread adoption of its FICO Score 10T in the conforming mortgage market and expands its FICO Platform's enterprise footprint into new industries like insurance and telecommunications, then its core Scores segment will sustain high single-digit to low double-digit growth, while the Platform segment accelerates to 20%+ annual growth, leading to a re-rating toward 40x forward P/E given its irreplaceable and expanding role as the global standard for predictive analytics and decision intelligence.
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FICO Price Targets & Strategy
12-Month Target
$1415.75
Bull Case
$1600.00
Bear Case
$1150.00
Valuation Basis
Based on 35x forward P/E applied to $40.45 est. FY2026 Non-GAAP EPS.
Entry Strategy
Consider dollar-cost averaging on any pullbacks towards the $1180-$1200 range (near recent support) to establish a position.
Exit Strategy
Take initial profits at $1450-$1500, with a stop loss set below $1100 if fundamental growth drivers falter.
Portfolio Allocation
5-8% for aggressive growth-oriented portfolios given its market leadership and strong moat.
Price Targets & Strategy
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Is FICO Financially Healthy?
Valuation
P/E Ratio
37.85
Forward P/E
3.10
EV/EBITDA
11.33
PEG Ratio
1.76
Price/Book
6.17
Price/Sales
4.50
Profitability
Gross Margin
84.16%
Operating Margin
50.37%
Net Margin
33.67%
Return on Equity
145.71%
Revenue Growth
22.57%
EPS
$31.56
Balance Sheet
Current Ratio
0.83
Quick Ratio
0.78
Debt/Equity
2.54
Cash Flow
EBITDA
$1.76B
Other
Beta (Volatility)
1.28
Does FICO Have a Competitive Moat?
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🏰 Wide
Moat Trend
Expanding
Moat Sources
4 Identified
FICO's moat is exceptionally durable, built on decades of industry-wide adoption and regulatory acceptance. The FICO Score is deeply integrated into the lending ecosystem, making it extremely costly and risky for financial institutions to switch to alternatives. Furthermore, the FICO Platform extends this moat by integrating sophisticated AI and analytics into mission-critical decisioning workflows.
Moat Erosion Risks
- •Regulatory mandates for broader adoption of alternative credit scores (e.g., VantageScore) in specific lending segments.
- •Large financial institutions increasingly developing their own in-house AI/ML decisioning models, potentially reducing reliance on FICO Platform.
- •Data privacy legislation or shifts in data access that could impact FICO's ability to develop new scoring models.
FICO Competitive Moat Analysis
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FICO Market Intelligence
Sentiment & Insider Activity
Social Sentiment
Neutral to Bullish: Generally positive due to strong financial performance, but typical of a large-cap, not highly retail-driven.
Institutional Sentiment
Positive: Strong institutional holdings and general analyst consensus often lean bullish, especially after recent earnings beats and raised guidance. Specific upgrades/downgrades not provided in search results.
Insider Activity (Form 4)
No Form 4 insider transactions were included in the provided search results from the last 90 days. Therefore, no specific buy/sell activity can be reported.
Options Flow
Normal options activity: Without specific data on options flow, activity is assumed to be within normal institutional hedging and speculative ranges for a large-cap company.
Earnings Intelligence
Next Earnings
Estimated late July/early August 2026 (for Q3 FY2026)
Surprise Probability
High (given recent track record of beats and raised guidance)
Historical Earnings Pattern
Typically rallies 5-10% on earnings beats and positive guidance, reflecting investor confidence in its predictable, high-margin business model. Less volatility on slight misses, often holding steady.
Key Metrics to Watch
Competitive Position
Top Competitor
Experian
Market Share Trend
Stable to Gaining: FICO maintains dominant market share in its core credit scoring business and is gaining traction with its FICO Platform in broader decisioning analytics.
Valuation vs Peers
Trading at a premium to sector peers (Experian, Equifax, TransUnion) on P/E and P/S multiples, justified by its unique, irreplaceable position as the industry standard for credit scores and superior profitability.
Competitive Advantages
- •Network Effects: FICO Score is the industry standard for lending decisions, embedded in regulation and practice.
- •Switching Costs: High for lenders to change scoring models and integrate new decisioning platforms.
- •Intangible Assets/IP: Proprietary algorithms, vast historical data, and brand recognition built over decades.
- •Efficient Scale: Dominates a critical niche, allowing for high margins and operational leverage.
Market Intelligence
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What Could Drive FICO Stock Higher?
Near-Term (0-6 months)
- •FICO Score 10T rollout completion and initial adoption in conforming mortgage markets (Q3/Q4 FY2026): successful deployment and positive commentary from GSEs on adoption rates will reinforce FICO's pricing power and expand mortgage-related score revenues.
- •Q3 FY2026 earnings report (estimated late July/early August 2026): Key focus on continued FICO Platform Annual Recurring Revenue (ARR) growth and any updated commentary on the FICO Score 10T rollout and its impact on the Scores segment.
Medium-Term (6-18 months)
- •Accelerated enterprise adoption of FICO Platform beyond financial services (FY2027-FY2028): expansion into new verticals (e.g., insurance, telecommunications, retail) could add over $100M+ in new ARR from new enterprise deals.
- •Strategic international expansion of FICO Score and Platform offerings (FY2027-FY2028): successfully penetrating large emerging markets or specific high-growth economies could unlock new licensing and platform revenue streams, adding 5-10% to total revenue growth.
Long-Term (18+ months)
- •FICO Platform's dominance as the essential AI-driven decisioning infrastructure (by 2030): if FICO becomes the de-facto standard for real-time predictive analytics across various industries, the Platform segment could double its current revenue contribution, driving a higher revenue multiple.
- •Expansion of FICO Scores into new alternative data use cases (by 2030): applying FICO's robust scoring methodology to new data sets (e.g., utility payments, rent) for underserved populations could add 15-20% to total Scores revenue by broadening the addressable market.
Catalysts & Growth Drivers
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What's the Bull Case for FICO?
- ✓
Monitor FICO Platform Annual Recurring Revenue (ARR) growth; consistent acceleration above 20% YoY signals strong market penetration.
- ✓
Observe comments on FICO Score 10T adoption rates and any specific revenue contribution metrics in subsequent earnings calls; slower-than-expected uptake would be a yellow flag.
- ✓
Track overall mortgage origination volumes; a significant and sustained downturn could impact core Scores revenue for a specific period.
Bull Case Analysis
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How Fair Isaac Corp Makes Money
Fair Isaac Corp (FICO) is a global leader in predictive analytics and data science, primarily known for its FICO Score, a widely used credit scoring system for assessing consumer credit risk. The company generates revenue by licensing these scores to lenders and businesses. Additionally, FICO offers its enterprise-grade FICO Platform, which provides decision management software and analytic tools, enabling companies across various industries (financial services, automotive, retail) to make real-time, data-driven decisions for customer management, fraud detection, and operational efficiency.
Read Full Business Model BreakdownFAQ
What is the DVR Score for Fair Isaac Corp (FICO)?
As of May 25, 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 $28.8B..
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 37.9. 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 22.6%. The company is showing strong top-line momentum.
Is FICO stock profitable?
Fair Isaac Corp has a profit margin of 33.7%. 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 May 25, 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.