FAIR ISAAC CORP. $78.02 - New York symbol FICO

FAIR ISAAC CORP. $78.02 (New York symbol FICO; TSINetwork Rating: Average)(415-472-2211; www.fairisaac.com; Shares outstanding: 32.1 million; Market cap: $2.4 billion; Dividend yield: 0.1%) makes FICO Scores, the program that dominates the market for software that businesses use to evaluate customer creditworthiness. The company is also profiting by selling programs that help credit card issuers control fraud and analyze cardholders’ spending patterns.

In its fiscal 2014 fourth quarter, which ended September 30, 2014, Fair Isaac’s earnings per share rose 39.2%, to $1.10 from $0.79 a year ago.

Revenue gained 16.4%, to $221.6 million from $190.3 million. The company saw stronger sales at its main applications division (66% of the total) on increased licensing revenue from software that detects bank fraud.

Meanwhile, the company’s balance sheet remains sound: it holds cash of $105.1 million, or $3.27 a share. Its total debt of $546.0 million is a reasonable 23% of its market cap.

For fiscal 2015, Fair Isaac expects to earn $2.78 to $2.88 a share. The stock has soared 47% since October 2014 and now trades at a high 27.6 times the midpoint of that range. As well, the banking industry accounts for 75% of the company’s revenue, and slowing mortgage demand could hurt sales of its credit-scoring software.

Fair Isaac is a hold.

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