FAIR ISAAC CORP. $51 - New York symbol FICO

FAIR ISAAC CORP. $51 .(New York symbol FICO; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 35.2 million; Market cap: $1.8 billion; Price-to-sales ratio: 2.5; Dividend yield: 0.2%; TSINetwork Rating: Average; www.fico.com) makes FICO Scores, a computer program that helps businesses make better decisions about customer creditworthiness. The company also produces software that helps credit card issuers control fraud and analyze cardholders’spending patterns.

In the company’s fiscal 2013 third quarter, which ended June 30, 2013, its earnings per share before one-time items rose 9.6% from a year ago, to $0.80 from $0.73.

Revenue gained 14.5%, to $183.8 million from $160.5 million. That’s largely because the company recently acquired Adeptra, which makes systems that let businesses communicate with customers through various channels, including voice, text messaging, mobile applications and email.

Fair Isaac’s revenue also benefited from recently acquired CR Software, whose programs help businesses automate their collection procedures.

The company spent $18.6 million (or 10.1% of its revenue) on research in the latest quarter. That’s up 24.7% from $14.9 million (or 9.3%) a year earlier. This spending hurts Fair Isaac’s earnings but lets it continue producing innovative products that help keep it ahead of the competition.

Fair Isaac’s balance sheet is sound: it holds cash of $93.0 million, or $2.64 a share, and its long-term debt of $447.0 million is a manageable 25% of its market cap.

For all of fiscal 2013, Fair Isaac should earn $2.80 a share. The stock trades at 18.2 times that figure. That’s reasonable for a company with strong growth prospects and high research spending.

Fair Isaac is a buy.

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