Core Viewpoint - Investors are increasingly seeking growth stocks that demonstrate above-average growth potential, particularly in the financial sector, to achieve exceptional returns. However, identifying such stocks can be challenging due to the inherent risks and volatility associated with them [1]. Group 1: Growth Stock Identification - The Zacks Growth Style Score system aids in identifying promising growth stocks by analyzing a company's actual growth prospects beyond traditional metrics. Fair Isaac (FICO) is highlighted as a recommended stock with a favorable Growth Score and a top Zacks Rank [2]. - Research indicates that stocks with strong growth features consistently outperform the market, especially those with a Growth Score of A or B and a Zacks Rank of 1 (Strong Buy) or 2 (Buy) [3]. Group 2: Earnings Growth - Earnings growth is a critical factor for growth investors, with double-digit growth being particularly attractive as it signals strong future prospects. Fair Isaac has a historical EPS growth rate of 26.1%, with projected EPS growth of 25.6% this year, significantly surpassing the industry average of 6.3% [4]. Group 3: Cash Flow Growth - Cash flow growth is essential for growth-oriented companies, allowing them to expand without relying on external funding. Fair Isaac's year-over-year cash flow growth stands at 5.4%, outperforming many peers and contrasting with the industry average of -14% [5]. - The historical annualized cash flow growth rate for Fair Isaac over the past 3-5 years is 20.3%, compared to the industry average of 8% [6]. Group 4: Earnings Estimate Revisions - Trends in earnings estimate revisions are indicative of a stock's potential performance, with positive revisions correlating strongly with stock price movements. Fair Isaac's current-year earnings estimates have been revised upward, with the Zacks Consensus Estimate increasing by 1.6% over the past month [7][8]. Group 5: Investment Positioning - The combination of favorable earnings estimate revisions and a solid Growth Score positions Fair Isaac well for potential outperformance, making it an attractive option for growth investors [9].

Core Viewpoint - Fair Isaac Corporation (FICO) has significantly outperformed its peers in the IT Services industry and the broader Computer & Technology sector year-to-date, with a stock price increase of 49% compared to 16.7% for Infosys and 16.8% for ServiceNow, while the sector overall appreciated by 12.5% [1] Group 1: Stock Performance and Revenue Growth - The strong stock performance is attributed to the robust adoption of the FICO Platform and FICO Score, leading to a significant increase in clientele and top-line growth [2] - In the third quarter of fiscal 2024, FICO reported a 12% year-over-year increase in revenues, with Software revenues growing by 5% and Scores revenues by 20% [2] Group 2: Market Position and Demand - FICO maintains a strong position in the consumer credit scoring market, bolstered by the adoption of FICO Score 10-T for non-GSE mortgages, which covers over $126 billion in annual originations and $380 billion in servicing [3] - The FICO Platform and SaaS services experienced growth in the third quarter of 2024, with total Annual Recurring Revenue (ARR) increasing by 10% and platform ARR by 31% [4] Group 3: Strategic Partnerships and Innovations - FICO's partnership with Cognizant to launch a cloud-based real-time payment fraud prevention solution highlights its expanding clientele and commitment to enhancing security measures through AI and machine learning [5] Group 4: Financial Outlook - For fiscal year 2024, FICO expects total revenues of $1.7 billion, with a non-GAAP earnings estimate of $23.16 per share, while the Zacks Consensus Estimate for revenues is $1.71 billion, indicating a year-over-year growth of 13.23% [6] - The consensus for fiscal 2024 earnings is $23.77 per share, reflecting a year-over-year growth of 20.66% despite a slight decline in estimates over the past 30 days [7] Group 5: Investment Considerations - Despite the strong portfolio and growing client base, challenges such as a slowdown in mortgage origination due to rising interest rates and competition in the Score and Software segments may impact FICO's top-line growth in 2024 [8] - FICO's current forward 12-month Price/Sales ratio is 26.23X, which is higher than its median of 20.20X and the sector's 10.51X, indicating a potentially stretched valuation [8]

Core Viewpoint - Fair Isaac (FICO) reported mixed financial results for Q3 fiscal 2024, with earnings per share missing estimates but revenues showing year-over-year growth. The company has seen an 8.5% increase in share price since the last earnings report, outperforming the S&P 500, raising questions about future performance leading up to the next earnings release [1][2]. Financial Performance - Q3 fiscal 2024 earnings were $6.25 per share, missing the Zacks Consensus Estimate by 1.88%, but up 10.4% year over year [2]. - Revenues reached $448 million, a 12.3% increase year over year, but slightly below the consensus mark by 0.15% [2]. - Revenue contributions came from the Americas (85%), EMEA (10%), and Asia Pacific (5%) [2]. Revenue Breakdown - Software revenues increased 5% year over year to $206.4 million, with Software Annual Recurring Revenues (ARR) growing 10% year over year [3]. - On-premises and SaaS software revenues, accounting for 41% of total revenues, rose 6.8% year over year to $183.8 million [4]. - Scores, which represent 53.9% of revenues, increased 19.7% year over year to $241.5 million [4]. Segment Performance - B2B revenues grew 27% year over year, primarily due to unit price increases, while B2C revenues fell 2% due to lower volumes on myFICO.com [5]. - Mortgage originations revenues surged 80%, making up 49% of B2B revenues and 39% of total scores revenues [5]. - Auto originations revenues decreased by 3% year over year, and credit card and personal loan revenues declined by 7% [5]. Operating Metrics - Research & development expenses as a percentage of revenues decreased by 50 basis points to 9.9% year over year [6]. - Selling, general and administrative expenses increased by 80 basis points to 27.9% year over year [6]. - Operating margin contracted by 190 basis points to 42.5% in the reported quarter [6]. Balance Sheet and Cash Flow - As of June 30, 2024, FICO had $156 million in cash and cash equivalents and total debt of $2.11 billion, compared to $135.7 million in cash and $2.04 billion in debt as of March 31, 2024 [7]. - Cash flow from operations was $213.3 million in Q3, up from $71.04 million in the previous quarter, while free cash flow decreased to $20.5 million from $61.6 million [7]. Share Repurchase and Guidance - In Q3, FICO repurchased 196,000 shares and announced a new Board authorization for $1 billion in share repurchases [8]. - For fiscal 2024, FICO anticipates revenues of $1.7 billion and non-GAAP earnings projected at $23.16 per share [9]. Market Position and Outlook - Fair Isaac holds a Zacks Rank 4 (Sell), indicating expectations of below-average returns in the coming months [12]. - The company is part of the Zacks Computers - IT Services industry, which has seen mixed performance among peers, such as Roper Technologies, which reported a 12.1% year-over-year revenue increase [13].

Core Insights - Fair Isaac Corp. (FICO) stock experienced a decline after insider selling, with two executives selling shares worth over $8 million, which investors often interpret as a sign of reduced confidence in the company's outlook [1][2][3] Group 1: Insider Selling - SEC filings revealed that Chief Financial Officer Steven Weber sold 1,800 shares for more than $3 million on August 9, and Executive Vice President Thomas Bowers sold 3,000 shares worth over $5 million on August 12 [3] - The requirement for insiders to file SEC Form 4 within two business days of a material change in stock holdings highlights the importance of transparency in the market [3] Group 2: Stock Performance - Following the release of FICO's earnings report, which showed earnings per share (EPS) slightly below estimates but revenue exceeding forecasts, the stock reached an all-time high above $1,800 on August 14 [4] - Despite the recent decline of 4.2%, FICO shares are still up nearly 50% year-to-date in 2024 [4]

Core Insights - Fair Isaac (FICO) reported revenue of $447.85 million for the quarter ended June 2024, reflecting a year-over-year increase of 12.3% [1] - Earnings per share (EPS) for the quarter was $6.25, up from $5.66 in the same quarter last year [1] - The reported revenue was slightly below the Zacks Consensus Estimate of $448.53 million, resulting in a revenue surprise of -0.15% [1] - The EPS fell short of the consensus estimate of $6.37, leading to an EPS surprise of -1.88% [1] Revenue Breakdown - On-premises and SaaS software revenue was $183.79 million, compared to the average estimate of $184.70 million, marking a year-over-year increase of 6.8% [3] - Scores revenue reached $241.45 million, exceeding the average estimate of $240.70 million, with a year-over-year growth of 19.7% [4] - Professional Services revenue was $22.61 million, slightly above the average estimate of $22.45 million, but showed a year-over-year decline of 9% [5] - Overall software revenue was reported at $206.40 million, compared to the estimated $207.15 million [6] Stock Performance - Fair Isaac's shares have returned +3.9% over the past month, contrasting with a -0.4% change in the Zacks S&P 500 composite [6] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [6]

Financial Performance - Total revenues for the quarter ended June 30, 2024, were $447.8 million, a 12% increase from the same quarter in 2023[69]. - Revenues for the Scores segment were $241.5 million during the quarter ended June 30, 2024, a 20% increase from the same quarter in 2023[69]. - Annual Recurring Revenue for the Software segment as of June 30, 2024, was $709.6 million, a 10% increase from June 30, 2023[69]. - Operating income for the quarter ended June 30, 2024, was $190.3 million, a 7% increase from the same quarter in 2023[69]. - Net income for the quarter ended June 30, 2024, was $126.3 million, a 2% decrease from the same quarter in 2023[69]. - Diluted EPS for the quarter ended June 30, 2024, was $5.05, a 1% decrease from the same quarter in 2023[69]. - For the nine months ended June 30, 2024, total revenues reached $1.26 billion, a 12% increase from $1.12 billion in the same period of 2023[83]. - Net income for the nine months ended June 30, 2024, was $377.1 million, a 15% increase from $328.0 million in the same period of 2023[86]. Cash Flow and Debt - Cash flows from operating activities for the nine months ended June 30, 2024, were $406.5 million, compared to $304.9 million for the same period in 2023[69]. - Total debt balance as of June 30, 2024, was $2.1 billion, an increase from $1.9 billion as of September 30, 2023[69]. - Net cash used in financing activities increased to $365.0 million for the nine months ended June 30, 2024, up from $271.2 million in the prior year, primarily due to increased stock repurchases[117]. - The company has a total credit capacity of $1.35 billion, including a $600 million unsecured revolving line of credit and a $450 million unsecured term loan[122]. - As of June 30, 2024, the company had $118.0 million in borrowings under the revolving line of credit at a weighted-average interest rate of 6.688%[123]. Segment Performance - The Scores segment revenues for the quarter ended June 30, 2024, were $241.5 million, a 20% increase from $201.8 million in the same quarter of 2023[81]. - The Software segment revenues for the quarter ended June 30, 2024, were $206.4 million, reflecting a 5% increase from $196.9 million in the same quarter of 2023[81]. - The platform segment's ARR grew from $113.1 million to $164.1 million, reflecting a year-over-year increase of 45.2%[76]. - The non-platform segment's ARR increased from $437.0 million to $496.2 million, showing a year-over-year growth of 13.5%[76]. - Scores segment operating income increased by $36.0 million, driven by a $39.7 million increase in segment revenue, resulting in an operating income margin of 88%[106]. - Software segment operating income decreased by $5.3 million due to a $14.8 million increase in operating expenses, with an operating income margin dropping to 34% from 38%[107]. Expenses and Operating Metrics - Total operating expenses for Q2 2024 increased to $257.6 million, a 16% rise from $221.7 million in Q2 2023[85]. - Research and development expenses for Q2 2024 were $44.2 million, representing 10% of revenues, down from 11% in Q2 2023[90]. - Selling, general and administrative expenses for Q2 2024 totaled $124.9 million, accounting for 28% of revenues, up from 27% in Q2 2023[93]. - Interest expense for Q2 2024 was $26.9 million, an increase of 9% from $24.5 million in Q2 2023[85]. - The effective income tax rate for Q2 2024 was 24.5%, compared to 18.4% in Q2 2023[102]. Stock and Shareholder Returns - Total share repurchases during the quarter ended June 30, 2024, were $255.5 million, compared to $98.6 million during the same quarter in 2023[69]. - The company approved a new stock repurchase program in July 2024, authorizing repurchases up to $1.0 billion[120]. Future Outlook - The company anticipates continued growth in both platform and non-platform segments, with a focus on expanding SaaS offerings and enhancing customer retention strategies[78].

Company Performance - Fair Isaac Corporation (FICO) is expected to report strong fiscal third-quarter 2024 results, benefiting from growth in scores and software solutions, with scores revenues estimated at $241 million, reflecting a 19.3% year-over-year increase [3] - The consensus estimate for FICO's on-premises and SaaS software revenues is $185 million, indicating a 7.55% year-over-year increase [4] - FICO's software business is anticipated to benefit from its "land-and-expand" strategy, with positive trends in Annual Recurring Revenue (ARR) and Net Revenue Retention (NRR) [10] Earnings Estimates - The consensus mark for FICO's earnings is set at $6.37 per share, which has decreased by a penny over the past 30 days [2] - FICO has an Earnings ESP of -1.83% and a Zacks Rank of 4 (Sell), indicating a lower likelihood of an earnings beat [5][18] Market Trends - The Scores segment, particularly in mortgage originations, continues to show robust growth, driven by the adoption of FICO Score 10T for non-conforming mortgages [16] - The company is investing heavily in innovation, with advancements showcased at the recent FICO World event, including an open API framework and a FICO marketplace, expected to enhance customer satisfaction and usage [17] Other Companies - Apple (AAPL) is set to report its third-quarter fiscal 2024 results on August 1, with shares gaining 13.2% year to date and a revenue estimate of $448.53 million, suggesting a 12.5% increase from the previous year [7][8] - Shopify (SHOP) is scheduled to report its second-quarter 2024 results on August 7, with shares declining 23.1% year to date and an Earnings ESP of +7.78% [11][19] - Cognizant Technology Solutions (CTSH) has an Earnings ESP of +0.09% and is set to report second-quarter 2024 results on July 31 [12][21]

Core Insights - The upcoming earnings report for Fair Isaac (FICO) is expected to show a year-over-year earnings increase, with a consensus EPS estimate of $6.37, reflecting a 12.5% growth from the previous year [17][2]. - The Zacks Earnings ESP indicates a negative reading of -1.83%, suggesting that analysts have recently become bearish on the company's earnings prospects [21]. - The consensus EPS estimate has been revised 0.24% lower over the last 30 days, indicating a reassessment of the company's earnings outlook by covering analysts [18]. Group 1: Earnings Expectations - Fair Isaac is projected to report revenues of $448.53 million, which is a 12.5% increase compared to the same quarter last year [2]. - The company has a history of beating consensus EPS estimates, having done so two out of the last four quarters [13]. - The earnings report is anticipated to be released on July 31, 2024, and could significantly impact the stock price depending on whether the results meet or exceed expectations [16]. Group 2: Analyst Insights - The Zacks Earnings ESP model compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate being a more recent version that may reflect the latest information [4]. - A negative Earnings ESP reading does not necessarily indicate an earnings miss, but it complicates the prediction of an earnings beat [5]. - The predictive power of the Earnings ESP model is significant primarily for positive readings, with a strong correlation to earnings beats when combined with a favorable Zacks Rank [20]. Group 3: Market Sentiment - Despite the potential for an earnings beat, Fair Isaac does not currently appear to be a compelling candidate for such an outcome, and investors should consider other factors before making investment decisions [15]. - The stock carries a Zacks Rank of 4, indicating a sell recommendation, which may further influence investor sentiment [6]. - The overall market expectation is that earnings will increase due to higher revenues, but actual results will be crucial in determining stock performance [7].

Group 1: MicroStrategy (MSTR) - MicroStrategy is recognized as "building the world's largest Bitcoin company" with analysts projecting an additional 80% upside for its stock [2] - The company announced a 10-for-1 stock split on July 11, leading to a 7% surge in share price, which has increased over 230% in the last 12 months, trading at $1,500 per share [6][15] - Following the split, the adjusted share price will be approximately $150, and MicroStrategy holds 226,331 Bitcoin valued at $13.30 billion [15] Group 2: NVR (NVR) - NVR has never split its stock since going public in 1993, resulting in a high share price of $8,000, which limits accessibility for most investors [4][8] - Despite the high price, NVR's stock has gained nearly 30% over the last 12 months, including a 15% gain this year, with a reasonable price-earnings ratio of 16 times future earnings estimates [17] Group 3: Fair Isaac Corp. (FICO) - Fair Isaac Corp. is a strong candidate for a stock split, with its share price at $1,550, nearly doubling in the last year and showing a 37% year-to-date gain [11][16] - The company has not split its stock in 20 years, and a split could make shares more accessible to retail investors, given its near-monopoly in U.S. credit scoring [16]

Core Viewpoint - Nvidia's recent 10-for-1 stock split may encourage other companies to consider similar actions to make their shares more accessible to average investors [1][2]. Group 1: Nvidia Stock Split - Nvidia's stock split will occur after market close on June 7, marking its second split in three years, following a four-for-one split in July 2021 [1]. - Shareholders will receive nine new shares for every existing share held, making the stock more affordable for retail investors [1]. Group 2: NVR (NVR) - NVR is a leading home builder in the U.S., operating in 36 metropolitan markets across 16 states, with a focus on single-family homes [4]. - The company's stock price has increased significantly from $3,400 five years ago to over $7,750 currently, necessitating an 80-for-1 stock split to reach a price of $100 [6]. Group 3: MercadoLibre (MELI) - MercadoLibre, a prominent Latin American company, has never conducted a stock split in its 25-year history, with current shares trading over $1,700 [8]. - The company's stock has appreciated 181% over the past five years, significantly outperforming the S&P 500, and analysts suggest a stock split could make shares more accessible [9][10]. Group 4: Fair Isaac (FICO) - Fair Isaac is known for its FICO score, with two main segments: Scores and Software, both of which saw revenue growth in Q2 2024 [12][13]. - The company anticipates nearly $1.7 billion in revenues for 2024, with a non-GAAP earnings per share estimate of $22.80, indicating a high valuation at 56.5 times those earnings [14][15].