Here's Why Fair Isaac Is Jumping Higher Today

What happened

The stock market was having a modestly strong day on Friday, with the Dow Jones Industrial Average flat and both the S&P 500 and Nasdaq up by less than 1% as of 2:20 p.m. ET. However, Fair Isaac (NYSE: FICO), the financial technology company behind the widely used FICO credit scoring model, was a major outperformer, with shares up by nearly 13%.

So what

Since we're now well into earnings season, you might have guessed that is what's fueling the move today.

Person holding credit card and mobile phone.

Image source: Getty Images.

Fair Isaac reported its latest results (from its fiscal first quarter) after the market's close on Thursday, and it's not difficult to see why investors might be impressed. The company posted adjusted earnings that were 35% higher than the same quarter a year ago and well ahead of analyst expectations. Revenue grew year over year, but slightly missed expectations, however investors seem impressed with the company's profitability.

The company grew its annual recurring revenue in its software segment by 10% year over year, and the company reiterated its previous guidance for the full year.

Separately, Fair Isaac announced its board approved a new $500 million stock repurchase program and said it had completed the previous buyback program, which was also for $500 million, in just a couple of months, which followed another program implemented in August 2021. This is a pretty aggressive buyback, considering the company's entire market cap is less than $13 billion, and is a good indicator that management thinks the stock is attractively priced.

Now what

With the recent turbulence in the stock market, it's no wonder why investors are breathing a sigh of relief after Fair Issac's recent earnings. And with shares still about 15% below their 2021 high even after today's move, if the company keeps growing its subscription revenue and profitability, there could certainly be more upside in the quarters to come.

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Matthew Frankel, CFP® has no position in any of the stocks mentioned. The Motley Fool recommends Fair Isaac. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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