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Fair Isaac Corporation (FICO) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Fair Isaac Corporation (FICO)

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Intrinsic Value (DCF)

Current$1,616.29
→
Intrinsic$988.02
-39%
$634.48$988.02$1,658.79
Current price reflects execution expectations above 25% growth — not unreasonable for quality businesses.
Range: Bear $634 → Bull $1659. Current price implies expectations above the base case, closer to bull expectations.
Discount ↓Growth →21%23%25%27%
8%$1243$1353$1470$1594
10%$834$908$988$1073
12%$607$663$722$785
14%$464$507$554$603

Bull Case

  • Bull case ($1659) offers 3% upside at 30% growth, 9% discount

Bear Case

  • Bear case ($634) implies 61% downside at 20% growth, 12% discount
  • Trading 39% above base case — execution must exceed assumptions to justify
  • Using 25% growth — aggressive, watch for mean reversion
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5-Year Free Cash Flow Projection

Year 1$962.36M
Year 2$1.20B
Year 3$1.50B
Year 4$1.88B
Year 5$2.35B
Terminal$34.57B

📐 Model Inputs

Growth Rate25.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$769.88MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is FICO stock undervalued or overvalued?
🔴 OVERVALUED

FICO trades at $1616.29 vs. our DCF-derived intrinsic value of $797.91, implying -50% downside. Using a 10.0% WACC and 25.0% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($1262.91) suggests limited upside.

What is FICO's intrinsic value?

Using a 5-year DCF model: Base FCF of $770M, projected at 25.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $2.94B net debt and dividing by 0.02B shares: Bear $482.15 | Base $797.91 | Bull $1262.91. Current price $1616.29 implies -50% to base case.

How is FICO's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 25.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($22.54B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 29.3x.