Nearly every mortgage, car loan and credit card in America starts with a three-digit number, and one company has charged lenders for that number for three decades.
Most investors think the Fair Isaac (NYSE: FICO) story already ended. The company owned the credit score, raised prices year after year, and watched its stock climb more than tenfold. Then Washington let a cheaper rival into the mortgage market, the shares lost more than half their value, and the moat people used to admire was written off.
That version leaves out what happened to the business itself. While the stock fell, FICO’s earnings per share rose 37% in its latest fiscal year, cash flow hit a record, and lenders kept pulling FICO scores on nearly every loan. The market now values one of the most profitable companies in America at a lower multiple than the S&P 500. So did FICO’s profits ever depend on the monopoly, or just on the habit of every lender in the country?
Below, FICO goes through the full Stock Pickz checklist, including a stress test on the one revenue line the whole thesis depends on. Management came within one answer of triggering an automatic Skip.