Overall FICO gets a fundamental rating of 6 out of 10. We evaluated FICO against 278 industry peers in the Software industry. While FICO belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. FICO is not overvalued while it is showing excellent growth. This is an interesting combination.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

In the past year FICO was profitable.
FICO had a positive operating cash flow in the past year.
In the past 5 years FICO has always been profitable.
Each year in the past 5 years FICO had a positive operating cash flow.

1.2 Ratios

FICO's Return On Assets of 34.90% is amongst the best of the industry. FICO outperforms 98.92% of its industry peers.
FICO's Return On Invested Capital of 73.98% is amongst the best of the industry. FICO outperforms 100.00% of its industry peers.
FICO had an Average Return On Invested Capital over the past 3 years of 53.64%. This is significantly above the industry average of 10.73%.
The last Return On Invested Capital (73.98%) for FICO is above the 3 year average (53.64%), which is a sign of increasing profitability.

		Industry Rank	Sector Rank
ROA	34.9%
ROE	N/A
ROIC	73.98%

ROA(3y)30.67%

ROA(5y)28.58%

ROE(3y)N/A

ROE(5y)N/A

ROIC(3y)53.64%

ROIC(5y)46.65%

1.3 Margins

FICO's Profit Margin of 32.75% is amongst the best of the industry. FICO outperforms 91.01% of its industry peers.
In the last couple of years the Profit Margin of FICO has grown nicely.
With an excellent Operating Margin value of 47.00%, FICO belongs to the best of the industry, outperforming 97.12% of the companies in the same industry.
In the last couple of years the Operating Margin of FICO has grown nicely.
FICO has a Gross Margin of 82.23%. This is amongst the best in the industry. FICO outperforms 87.41% of its industry peers.
In the last couple of years the Gross Margin of FICO has grown nicely.

		Industry Rank	Sector Rank
OM	47%
PM (TTM)	32.75%
GM	82.23%

OM growth 3Y6.07%

OM growth 5Y12.28%

PM growth 3Y6.48%

PM growth 5Y12.39%

GM growth 3Y1.75%

GM growth 5Y2.67%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), FICO is creating value.
The number of shares outstanding for FICO has been reduced compared to 1 year ago.
Compared to 5 years ago, FICO has less shares outstanding
FICO has a worse debt/assets ratio than last year.

2.2 Solvency

FICO has an Altman-Z score of 11.80. This indicates that FICO is financially healthy and has little risk of bankruptcy at the moment.
With an excellent Altman-Z score value of 11.80, FICO belongs to the best of the industry, outperforming 93.53% of the companies in the same industry.
The Debt to FCF ratio of FICO is 4.14, which is a neutral value as it means it would take FICO, 4.14 years of fcf income to pay off all of its debts.
FICO has a Debt to FCF ratio of 4.14. This is in the better half of the industry: FICO outperforms 60.79% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	N/A
Debt/FCF	4.14
Altman-Z	11.8

ROIC/WACC6.75

WACC10.96%

2.3 Liquidity

A Current Ratio of 0.83 indicates that FICO may have some problems paying its short term obligations.
With a Current ratio value of 0.83, FICO is not doing good in the industry: 83.09% of the companies in the same industry are doing better.
A Quick Ratio of 0.83 indicates that FICO may have some problems paying its short term obligations.
FICO has a Quick ratio of 0.83. This is amonst the worse of the industry: FICO underperforms 82.73% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	0.83
Quick Ratio	0.83

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

FICO shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 27.22%, which is quite impressive.
FICO shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 25.08% yearly.
The Revenue has grown by 15.91% in the past year. This is quite good.
FICO shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 8.99% yearly.

EPS 1Y (TTM)27.22%

EPS 3Y20.14%

EPS 5Y25.08%

EPS Q2Q%26.6%

Revenue 1Y (TTM)15.91%

Revenue growth 3Y13.07%

Revenue growth 5Y8.99%

Sales Q2Q%16.36%

3.2 Future

The Earnings Per Share is expected to grow by 22.50% on average over the next years. This is a very strong growth
FICO is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 14.69% yearly.

EPS Next Y38.37%

EPS Next 2Y32.65%

EPS Next 3Y27.77%

EPS Next 5Y22.5%

Revenue Next Year22.58%

Revenue Next 2Y19.81%

Revenue Next 3Y17.47%

Revenue Next 5Y14.69%

3.3 Evolution

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.

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4. Valuation

4.1 Price/Earnings Ratio

Based on the Price/Earnings ratio of 46.52, the valuation of FICO can be described as expensive.
FICO's Price/Earnings is on the same level as the industry average.
When comparing the Price/Earnings ratio of FICO to the average of the S&P500 Index (28.32), we can say FICO is valued expensively.
FICO is valuated quite expensively with a Price/Forward Earnings ratio of 27.80.
The rest of the industry has a similar Price/Forward Earnings ratio as FICO.
FICO's Price/Forward Earnings ratio indicates a similar valuation than the S&P500 average which is at 25.57.

		Industry Rank	Sector Rank
PE	46.52
Fwd PE	27.8

4.2 Price Multiples

FICO's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. FICO is cheaper than 61.51% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of FICO is on the same level as its industry peers.

		Industry Rank	Sector Rank
P/FCF	46.92
EV/EBITDA	39.57

4.3 Compensation for Growth

FICO's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
The excellent profitability rating of FICO may justify a higher PE ratio.
A more expensive valuation may be justified as FICO's earnings are expected to grow with 27.77% in the coming years.