FAIR ISAAC CORP. $54.42 - New York symbol FICO

FAIR ISAAC CORP. $54.42 (New York symbol FICO; TSINetwork Rating: Average) (415-472-2211; www.fairisaac.com; Shares outstanding: 35.2 million; Market cap: $1.9 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 cardholders’ spending patterns.

In its fiscal 2013 third quarter, which ended June 30, 2013, Fair Isaac’s earnings per share before onetime 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.

Fair Isaac continues to spend around 9% 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 of $93.0 million, or $2.59 a share. Its long-term debt of $447.0 million is a manageable 24% of its market cap.

For all of 2013, Fair Isaac should earn $2.80 a share. The stock trades at 19.4 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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