DCF Studio

    FICO · NYQ · Technology

    Fair Isaac Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 413.48

    Market price

    USD 949.68

    Implied upside

    -56.5%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Current EV/EBITDA of 24.7x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 413.48-56.5%
    Exit multiple
    USD 862.60-9.2%
    Market price
    USD 949.68

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 2.3bnUSD 2.5bnUSD 2.9bnUSD 3.3bnUSD 3.7bn+13.1%
    EBITUSD 964.8mUSD 1.1bnUSD 1.2bnUSD 1.4bnUSD 1.6bn+13.1%
    NOPATUSD 767.7mUSD 868.0mUSD 981.4mUSD 1.1bnUSD 1.3bn+13.1%
    Add depreciation & amortisationUSD 22.6mUSD 25.5mUSD 28.8mUSD 32.6mUSD 36.9m+13.1%
    Less capital expenditureUSD -23.6mUSD -26.6mUSD -30.1mUSD -34.0mUSD -38.5m+13.1%
    Less increase in working capitalUSD -26.1mUSD -29.5mUSD -33.4mUSD -37.8mUSD -42.7m+13.1%
    Free cashflow to firmUSD 740.5mUSD 837.3mUSD 946.7mUSD 1.1bnUSD 1.2bn+13.1%
    Discount factor0.95060.85890.77610.70130.6336-
    Present valueUSD 703.9mUSD 719.2mUSD 734.8mUSD 750.7mUSD 766.9m+2.2%
    Present Value Of The ForecastUSD 3.7bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.213Reported 1.318, pulled toward 1.0 (Blume)
    Cost of equity11.67%Risk-free + beta x equity risk premium
    Cost of debt5.04%Interest expense / average total debt
    Market capitalisationUSD 20.5bn87.0% of capital
    Total debtUSD 3.1bn13.0% of capital, book value as a proxy
    Tax rate20.4%Effective, capped at statutory
    WACC10.67%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 413.48

    72% of EV

    Forecast FCFF, final year
    USD 1.2bn
    Capex at depreciation, working capital in reinvestment
    USD 1.3bn
    Less reinvestment at g/ROIC (5.5% of NOPAT)
    USD -69.5m
    Capitalised
    USD 1.2bn
    ROIC (reported)
    45.1%
    Terminal value, undiscounted
    USD 14.9bn
    Terminal value, discounted
    USD 9.4bn
    Enterprise value
    USD 13.1bn
    Less net debt
    USD 2.9bn
    Equity value
    USD 10.2bn

    Exit at 20.0x EBITDA

    Value per shareUSD 862.60

    85% of EV

    Terminal value, undiscounted
    USD 32.3bn
    Terminal value, discounted
    USD 20.5bn
    Enterprise value
    USD 24.1bn
    Less net debt
    USD 2.9bn
    Equity value
    USD 21.2bn

    Spread between methods: 70%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    8.67%517.89550.53588.39632.85685.84
    9.67%438.36461.91488.70519.44555.11
    10.67%376.26393.82413.48435.66460.88
    11.67%326.45339.87354.73371.26389.76
    12.67%285.62296.10307.58320.21334.19

    Outlined: this model. Green text: above today's price of 949.68. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year13.1%32.0%+19.0pp
    EBIT margin42.9%85.5%+42.7pp
    Discount rate10.7%6.6%-4.1pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.