Core Insights - Fair Isaac's stock has experienced a significant decline but has returned over 43,000% since the mid-1990s, indicating a long-term growth trajectory despite recent challenges [1][2] - The U.S. government's decision to allow Fannie Mae and Freddie Mac to use VantageScore has disrupted Fair Isaac's long-standing monopoly in the credit scoring market [2][7] - The stock's recent decline may present a buying opportunity for long-term investors, as the company remains fundamentally strong [3][13] Company Performance - Fair Isaac's FICO score is utilized by approximately 90% of top U.S. lenders and credit unions, and 95% of U.S. securitizations reference the FICO score for risk assessment [5][6] - The company's pricing strategy has come under scrutiny, with a recent increase in wholesale royalty prices from $3.50 to $4.95 per score, a rise of over 40% [7][8] - Despite the price increase, the cost of the FICO score is minimal compared to total mortgage closing costs, suggesting that lenders may not switch to alternative scoring systems for minor savings [8] Market Dynamics - The stock's valuation has adjusted from a peak price-to-earnings (P/E) ratio of nearly 120, indicating a correction in overextended valuations [10][12] - Long-term earnings growth estimates for Fair Isaac are optimistic, projecting a 27% annualized growth rate, resulting in a price/earnings-to-growth (PEG) ratio of about 2 [13] - The company has been actively buying back stock, having reduced its diluted share count by nearly 25% over the past decade, which supports earnings per share growth [15] Future Outlook - Fair Isaac's ability to maintain pricing power for its FICO scores will be crucial for future growth, although significant price increases like the recent 40% hike may not be expected [14] - The company is well-positioned to benefit from continued borrowing trends in the U.S. and abroad, leveraging its market leadership in credit scoring [14]