We assign a fundamental rating of 6 out of 10 to FICO. FICO was compared to 278 industry peers in the Software industry. FICO has an excellent profitability rating, but there are some minor concerns on its financial health. FICO is not priced too expensively while it is growing strongly. Keep and eye on this one!

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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.
Each year in the past 5 years FICO has been profitable.
In the past 5 years FICO always reported a positive cash flow from operatings.

1.2 Ratios

Looking at the Return On Assets, with a value of 34.90%, FICO belongs to the top of the industry, outperforming 98.92% of the companies in the same industry.
The Return On Invested Capital of FICO (73.98%) is better than 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 10.74%.
The 3 year average ROIC (53.64%) for FICO is below the current ROIC(73.98%), indicating increased profibility in the last year.

		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

The Profit Margin of FICO (32.75%) is better than 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.
FICO's Operating Margin has improved in the last couple of years.
FICO has a better Gross Margin (82.23%) than 87.41% of its industry peers.
FICO's Gross Margin has improved in the last couple of years.

		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

The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so FICO is creating value.
Compared to 1 year ago, FICO has less shares outstanding
FICO has less shares outstanding than it did 5 years ago.
Compared to 1 year ago, FICO has a worse debt to assets ratio.

2.2 Solvency

An Altman-Z score of 12.12 indicates that FICO is not in any danger for bankruptcy at the moment.
FICO has a Altman-Z score of 12.12. This is amongst the best in the industry. FICO outperforms 92.81% of its industry peers.
FICO has a debt to FCF ratio of 4.14. This is a neutral value as FICO would need 4.14 years to pay back of all of its debts.
With a decent Debt to FCF ratio value of 4.14, FICO is doing good in the industry, outperforming 61.15% of the companies in the same industry.

		Industry Rank	Sector Rank
Debt/Equity	N/A
Debt/FCF	4.14
Altman-Z	12.12

ROIC/WACC6.76

WACC10.94%

2.3 Liquidity

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

		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

The Earnings Per Share has grown by an impressive 25.99% over the past year.
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.
The Revenue has been growing by 8.99% on average over the past years. This is quite good.

EPS 1Y (TTM)25.99%

EPS 3Y20.14%

EPS 5Y25.08%

EPS Q2Q%18.35%

Revenue 1Y (TTM)15.91%

Revenue growth 3Y13.07%

Revenue growth 5Y8.99%

Sales Q2Q%13.65%

3.2 Future

FICO is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 22.50% yearly.
Based on estimates for the next years, FICO will show a quite strong growth in Revenue. The Revenue will grow by 14.69% on average per year.

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

The EPS growth rate is stable: in the next years the growth will be about the same than in the last years.
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

FICO is valuated quite expensively with a Price/Earnings ratio of 51.64.
FICO's Price/Earnings ratio is in line with the industry average.
Compared to an average S&P500 Price/Earnings ratio of 27.21, FICO is valued quite expensively.
The Price/Forward Earnings ratio is 37.32, which means the current valuation is very expensive for FICO.
FICO's Price/Forward Earnings is on the same level as the industry average.
Compared to an average S&P500 Price/Forward Earnings ratio of 25.98, FICO is valued a bit more expensive.

		Industry Rank	Sector Rank
PE	51.64
Fwd PE	37.32

4.2 Price Multiples

FICO's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. FICO is cheaper than 63.31% of the companies in the same industry.
FICO's Price/Free Cash Flow ratio is in line with the industry average.

		Industry Rank	Sector Rank
P/FCF	49.53
EV/EBITDA	41.6

4.3 Compensation for Growth

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