Fair Isaac Corp.

AEROPOSTALE INC., $25.23, symbol ARO on New York, reported higher sales and profits this week. Notwithstanding the weak economy, the teen-clothing retailer took market share from its rivals, mainly on the strength of its lower prices. During the quarter, Aeropostale posted positive same-store sales, while rivals The Gap and American Eagle saw their same-store sales drop. In the three months ended January 31, 2009, Aeropostale’s revenue rose 16.7%, to $690 million from $591.3 million a year earlier. Same-store sales rose 6%, and online sales jumped 88%, to $41.4 million from $22 million, as more Christmas shoppers chose to make their purchases through the Internet. Aeropostale also added 86 new stores, which brings it to a total of 914. It operates 28 stores in Canada. Aeropostale’s wide variety of clothing, low prices and aggressive promotions continue to drive up the company’s sales. Its earnings rose 5.4%, to $68.2 million, or $1.02 a share, from $64.7 million, or $0.96 a share. Higher holiday sales were offset by markdowns, which lowered profits....

FAIR ISAAC CORP. $16 (New York symbol FIC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 48.5 million; Market cap: $776 million; Price-to-sales ratio: 1.0; WSSF Rating: Average) provides products and services that help businesses around the world make better decisions on customer creditworthiness. Its main business is its FICO software, which lets creditors use information about a customer to calculate a credit score. In the fiscal year ended September 30, 2008, Fair Isaac’s revenue fell 5.0%, to $744.8 million from $784.2 million. Sales growth has slowed along with increasing problems in credit markets. Earnings per share fell by 15.5%, to $1.64 from $1.94. Fair Isaac now aims to expand the use of its FICO score in the face of growing competition; new deals with banks and credit unions will allow them to give free FICO scores to their customers. Helping borrowers improve their credit scores should also lead to fewer loan losses for Fair Isaac’s clients....

The credit crisis has weighed heavily on Broadridge and Fair Isaac, which provide specialized services to financial institutions. However, these services help their clients cut costs and comply with changing regulations. We still see both companies as buys for long-term gains. BROADRIDGE FINANCIAL SOLUTIONS INC. $14 (New York symbol BR; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 141.4 million; Market cap: $2.0 billion; Price-to-sales ratio: 1.0; WSSF Rating: Extra Risk) offers services to the investment industry in three main areas: investor communications, securities processing, and transaction clearing. Broadridge mails and processes 70% of all proxy votes. Broadridge’s revenue in its first fiscal quarter, ended September 30, 2008, rose 4.7%, to $472.4 million from $451.2 million a year earlier. It typically sells its services under long-term contracts that provide it with steady revenue streams. This cuts its risk. However, earnings fell 1.1%, to $35.6 million from $36.0 million. The drop was mainly due to the timing of extra expenses stemming from investments in technology and new products. Earnings per share fell 3.8%, to $0.25 from $0.26 on more shares outstanding....

SYMANTEC CORP., $15.33, symbol SYMC on Nasdaq, rose over 13% this week after it reported earnings that exceeded analysts’ consensus estimates. In the three months ended January 2, 2009, Symantec’s earnings, excluding one-time items, rose 20%, to $350.2 million from $291.7 million a year earlier. Earnings per share rose 27.3%, to $0.42 from $0.33 on 3.8% fewer shares outstanding. The latest earnings beat consensus forecasts of $0.34 a share. Sales fell slightly, to $1.51 billion from $1.52 billion. In the latest quarter, the computer security software maker saw sales of its consumer products and its data-storage and server-management services each rise 1.2%, partly offsetting a 3.8% decline in security and compliance software. International sales fell 5.8%, partly due to the strong U.S. dollar. However, despite a weak economy, U.S. sales rose 6.5%. Earnings rose despite the fall in overall sales, largely due to cost-cutting measures. Symantec is still a buy....

AUTODESK, INC. $19.21 (Nasdaq symbol ADSK; SI Rating: Average) (515-507-5000; www.autodesk.com; Shares outstanding: 226.3 million; Market cap: $4.3 billion) makes AutoCAD, the world’s top-selling computer aided design program. About four million architects and engineers in over 100 countries use it to design and test new buildings and products. This business supplies nearly 90% of its revenue. The remainder comes from programs that filmmakers use to create special effects. Revenues in the fiscal third quarter ended October 31, 2008 rose 12.8%, to $607.1 million from $538.4 million, thanks to an acquisition, favorable exchange rates and strong sales in emerging markets. Sales of the company’s advanced 3D design software (27% of total revenues) also contributed to the higher results. Earnings per share excluding one-time items rose 13.6%, to $0.56 from $0.49. The stock now trades at 11.6 times next year’s forecast earnings of $1.65 a share. That’s reasonable in light of Autodesk’s growth prospects and high research spending....

WACHOVIA CORP. $5.66, New York symbol WB, has settled a class-action lawsuit that aimed to block its upcoming takeover by WELLS FARGO & CO. $29.36, New York symbol WFC. The settlement of this lawsuit increases the likelihood that the takeover will proceed as planned. Wachovia stockholders will vote on the deal on December 23, 2008. If approved, they will receive 0.1991 of a Wells Fargo common share for each Wachovia share they currently hold. Wachovia investors should tender their shares to the Wells Fargo offer....

IAMGOLD CORP., $5.93, symbol IMG on Toronto, has made an all cash offer of 1.20 euros ($1.84 Cdn) a share for Paris-based royalty company Euro Resources, symbol EUR on Toronto. The offer values Euro Resources at about 75 million euros ($114.8 million Cdn). IAMGold could fully fund the purchase from its $140 million cash on hand. Euro Resources holds a royalty on production from IAMGold’s Rosebel gold mine in Suriname (formerly Dutch Guiana). Eliminating Euro’s Rosebel royalty will reduce IAMGold’s costs at the mine by $50 U.S. an ounce to about $455 U.S. an ounce. Euro Resources’ main asset is its Rosebel royalty, though it also owns certain mineral rights to the Paul Isnard gold properties in French Guiana....

FAIR ISAAC CORP. $23 (New York symbol FIC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 48.5 million; Market cap: $1.1 billion; WSSF Rating: Average) makes software that helps banks and businesses calculate the likelihood that a borrower will pay back a loan. Despite new competition, its FICO scoring system is still an industry standard. The subprime mortgage crisis has hurt the banks and other financial institutions that supply roughly half of Fair Isaac’s revenue. These customers may cut back on software spending in the near term. However, over the longer term, the subprime crisis will likely increase demand for Fair Isaac’s reliable credit-scoring software....

Slowdowns at their customers continue to hurt Broadridge, Fair Isaac and Cintas. However, all three offer services that help their clients save money, comply with regulations and strengthen customer loyalty. That gives them long-term appeal. All three of these companies are also attractive in relation to their earnings and revenue. We continue to view them as buys. BROADRIDGE FINANCIAL SOLUTIONS INC. $20 (New York symbol BR; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 140.3 million; Market cap: $2.8 billion; WSSF Rating: Extra risk) offers services to the investment industry in three main areas: investor communications; securities processing; and transaction clearing. These services help financial services institutions and public companies improve their efficiency and customer service....

FAIR ISAAC CORPORATION $20.72 (New York symbol FIC; SI Rating: Average) (415-472-2211; www.fairisaac.com; Shares outstanding: 48.6 million; Market cap: $1.0 billion) provides products and services that help businesses make better decisions on customer creditworthiness around the world. Its main business is its FICO software, which lets creditors use information about a customer to calculate a credit score. That score lets credit providers decide if they should give a customer a mortgage, a loan or a credit card. Major customers include banks, credit card issuers, insurers, retailers, telecom providers and government agencies. In the three months ended March 31, 2008, Fair Isaac’s revenues rose 1.3%, to $193.2 million from $190.7 million. Sales growth has slowed along with problems in credit and mortgage markets. Earnings per share fell 2.7%, to $0.36 from $0.37, on fewer shares outstanding. If you exclude the costs of Fair Isaac’s current restructuring plan, earnings per share in the latest quarter were up 18.9%, to $0.44....