Fair Isaac is scored 80 for moat and 78 for management. The management score rests on a return on invested capital of 53.0% and a gross margin of 82.2% — figures that describe a business earning a respectable return on what it employs. Shareholder equity is negative, so the debt-to-equity figure is not meaningful here — usually the mark of heavy buybacks rather than distress, but worth checking. A wide moat alongside strong management is a combination worth understanding before the price matters at all.
Three independent anchors set the price worth paying. Growth is modelled at 9.0% a year, the rate measured from the filings. The exit multiple assumed is 18.0x. That produces an intrinsic value of $363.87, a 10-CAP price of $439.45 and a payback time price of $528.01, with the value zone set at the highest of the three, $528.01. Today's price of $661.75 is 25% above it.
A wonderful business at the wrong price is still the wrong price. Fair Isaac scores well on the business and poorly on the entry point, which is the most common shape in a long bull market.
| Price | $661.75 |
| Market cap | $14.3B |
| P/E ratio | 19.1x |
| Return on invested capital | 53.0% |
| Gross margin | 82.2% |
| Debt to equity | -1.76x |
| Free cash flow yield | 2.1% |
| Growth rate used | 9.0% |
| Growth rate measured | 9.0% |
| Exit multiple assumed | 18.0x |
| Company | Moat | Buy price |
| Tyler Technologies (TYL) | 91 | $271.27 |
| Guidewire Software Inc (GWRE) | 65 | $55.26 |
| Manhattan Associates Inc (MANH) | 90 | $97.93 |
| PTC Inc. (PTC) | 96 | $121.26 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of Fair Isaac rather than accepting ours.