Thoughts after the recent sell-off? Fears overblown or thesis is over? Of course stock is still expensive but bounce back possible if regulatory pressures ease
From what I've read, fears seem overblown. FICO scores remain an extremely insignificant expense despite the company having leveraged its pricing power quite a lot in recent years.
However, that doesn't mean FICO stock has become undervalued all of a sudden. It was expensive at 1,500 a year ago and still expensive at 1,500 today.
For reference, a quick sanity check reveals FICO must grow its free cash flow by 14.5% for the coming 20 years to justify today's price. Using a 10 year reverse DCF, FICO will need to grow free cash flow 23% for the coming decade.
Bounce back is of course possible, but to me that seems more like speculation rather than investing. It is interesting what's happening, though, and I will keep an eye on the situation
Thoughts after the recent sell-off? Fears overblown or thesis is over? Of course stock is still expensive but bounce back possible if regulatory pressures ease
From what I've read, fears seem overblown. FICO scores remain an extremely insignificant expense despite the company having leveraged its pricing power quite a lot in recent years.
However, that doesn't mean FICO stock has become undervalued all of a sudden. It was expensive at 1,500 a year ago and still expensive at 1,500 today.
For reference, a quick sanity check reveals FICO must grow its free cash flow by 14.5% for the coming 20 years to justify today's price. Using a 10 year reverse DCF, FICO will need to grow free cash flow 23% for the coming decade.
Bounce back is of course possible, but to me that seems more like speculation rather than investing. It is interesting what's happening, though, and I will keep an eye on the situation