Fair Isaac Stock Lost 9.8% In A Day. Do You Buy Or Wait?
Fair Isaac (FICO) stock is down 9.8% in a day. Already own the stock or planning to buy? You might want to re-consider based on the valuation as the stock still looks expensive. Consider the following data:
- Size: Fair Isaac is a $41 Bil company with $1.8 Bil in revenue currently trading at $1,695.01.
- Fundamentals: Last 12 month revenue growth of 14.7% and operating margin of 44.2%.
- Liquidity: Has Debt to Equity ratio of 0.06 and Cash to Assets ratio of 0.08
- Valuation: Fair Isaac stock is currently trading at P/E multiple of 71.6 and P/EBIT multiple of 50.5
- Has one instance since 2010 where it dipped >30% in < 30 days and subsequently returned 66.3% within a year. See FICO Dip Buy Analysis.
While we like to buy dips if the fundamentals check out – for FICO, see Buy or Sell FICO Stock – we are wary of falling knives. Specifically, it is worth trying to answer if things get really bad, and FICO drops another 20-30% to $1187 levels, will we be able to hold on to the stock? What is the worst case scenario? We call it downturn resilience. Turns out, the stock saw an impact slightly better than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
That is one way to look at stocks. Trefis High Quality Portfolio evaluates much more, and is designed to reduce stock-specific risk while giving upside exposure.
Below are the details, but before that, as a quick background: FICO provides analytic, software, and data management solutions that help businesses automate, enhance, and connect decisions through scoring and software products integrated into transaction streams.
2022 Inflation Shock
- FICO stock fell 38.2% from a high of $552.88 on 23 July 2021 to $341.44 on 9 May 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 10 November 2022
- Since then, the stock increased to a high of $2,382.40 on 26 November 2024 , and currently trades at $1,695.01
| FICO | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -38.2% | -25.4% |
| Time to Full Recovery | 185 days | 464 days |
2020 Covid Pandemic
- FICO stock fell 50.9% from a high of $431.78 on 19 February 2020 to $212.00 on 18 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 29 July 2020
| FICO | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -50.9% | -33.9% |
| Time to Full Recovery | 133 days | 148 days |
2018 Correction
- FICO stock fell 28.6% from a high of $240.03 on 14 September 2018 to $171.50 on 24 December 2018 vs. a peak-to-trough decline of 19.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 13 February 2019
| FICO | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -28.6% | -19.8% |
| Time to Full Recovery | 51 days | 120 days |
2008 Global Financial Crisis
- FICO stock fell 76.2% from a high of $41.67 on 19 January 2007 to $9.90 on 5 March 2009 vs. a peak-to-trough decline of 56.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 9 March 2012
| FICO | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -76.2% | -56.8% |
| Time to Full Recovery | 1100 days | 1480 days |
Worried that FICO could fall much more? You could take a look at the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.