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Fair Isaac (FICO): analysis traps
Where its figures could mislead a reader, and what to check before taking them at face value · Data: Q4 FY26, to Sep 30, 2026, filed Nov 6, 2026; rules v1.1
Fair Isaac (FICO): 1 rule of 10 triggered on the filings to Sep 30, 2026: low net debt = no refinancing risk. 1 to review; 1 with insufficient data; 2 not applicable. Each is a question to verify, with the normal explanation that would produce the same figures.
Check these first
Low net debt = no refinancing risk Triggered · severity high · confidence medium
$338M of debt comes due within a year against $218M of cash and investments: $120M short, to be refinanced or raised. Net debt of $5.0B says nothing about when the debt falls due.
Innocent reading: A committed, undrawn credit facility covers the gap (not visible in the balance sheet).
A precise DCF value = the true value To review · confidence high
The DCF's point value is 1,003.70 a share (price 704.55); 77% of it is the terminal value, a number about years no one has seen. Moving revenue growth (each year) by ±5 pts alone takes it from 786.87 to 1,258.70; across every method the research ran the range is -83 to 1,787. The value is a range; the decimals are not information.
Innocent reading: A stable, mature business with a narrow range of outcomes, where the point value is a fair summary.
Every rule
A01 FCF growth = the business improved Not triggered confidence high
Free cash flow rose $300M to $1.1B; working capital and lower capex explain 26% of it, so most of the gain is in operating cash flow itself.
The figures and how they are read
| Fiscal year before | FY25 |
| Fiscal year | FY26 |
| Operating cash flow, year before | $779M |
| Operating cash flow | $1.1B |
| Capex, year before | $9M |
| Capex | $2M |
| Free cash flow, year before | $770M |
| Free cash flow | $1.1B |
| Change in FCF | $300M |
| Change in capex | −$7M |
| Working capital: change in its cash contribution | $70M |
| Of which: capex cut | $7M |
| Of which: working capital released | $70M |
| Share of the increase that need not repeat | +25.5% |
| Operating cash flow before working capital: change | 223495000.00 |
FCF = operating cash flow − cash capex; ΔFCF = ΔOCF − ΔCapEx; the working-capital part is the change in the cash-bridge items (receivables, inventory, payables, accruals), with the sign of the cash flow statement
Source: FY26 (cash flow statement, fiscal year) · FY25 (cash flow statement, fiscal year before)
A07 Stock compensation added back = no economic cost Not triggered confidence high
Stock compensation is 7.3% of revenue, but buybacks of $3.0B covered it (16.4×) and the diluted share count fell 6.4%: the dilution has been paid for in cash.
The figures and how they are read
| Fiscal year | FY26 |
| Stock compensation | $185M |
| Revenue | $2.5B |
| SBC / revenue | +7.3% |
| Buybacks | $3.0B |
| Buybacks / SBC | 16.4 |
| Diluted shares, year before | 24.6M shares |
| Diluted shares | 23.0M shares |
| Diluted shares: change | -6.4% |
SBC / revenue from the cash flow statement's add-back; the diluted weighted share count year over year; buybacks from the financing section
Source: FY26 (stock compensation, buybacks and the diluted share count, fiscal year)
B02 Receivables growing = future cash is certain Not triggered confidence medium
Receivables grew 14% against revenue 27% in Q4 FY26; DSO 84 against a median of 81: collections are keeping pace with sales.
The figures and how they are read
| Quarter | Q4 FY26 |
| Revenue, year over year | +27.4% |
| Receivables, year over year | +14.0% |
| Quarter before | Q3 FY26 |
| Revenue y/y, quarter before | +25.7% |
| Receivables y/y, quarter before | +30.5% |
| Days sales outstanding | 83.7 |
| DSO, median of eight quarters | 81.3 |
| Receivables | $603M |
| Revenue | $657M |
receivables and revenue against the same quarter a year earlier; DSO = receivables / quarterly revenue × days, against the median of the eight quarters before
Source: Q4 FY26 (receivables and revenue) · Q4 FY25 (the same quarter a year earlier)
B08 Adjusted profit = economic profit Insufficient data
no reconciliation table read from the releases yet and fewer than three quarters with both an adjusted and a GAAP EPS
C02 Low net debt = no refinancing risk Triggered severity high · confidence medium
$338M of debt comes due within a year against $218M of cash and investments: $120M short, to be refinanced or raised. Net debt of $5.0B says nothing about when the debt falls due.
The figures and how they are read
| Cash and investments | $218M |
| Debt | $5.3B |
| Net debt | $5.0B |
| Due within a year | $338M |
| Read from | the current portion of debt on the balance sheet |
| Free cash flow, twelve months | — |
| Cash plus free cash flow | $218M |
| Coverage of what is due | 0.6 |
| Due in the second year | — |
| Balance sheet date | 2026-09-30 |
due within a year from the maturity table (else the current portion of debt), against cash and investments plus free cash flow over the last twelve months (zero if negative); no credit lines assumed
Source: 2026-09-30 (debt maturities, cash and investments)
What would explain it innocently
- A committed, undrawn credit facility covers the gap (not visible in the balance sheet)
- The notes are routinely rolled over in the commercial-paper or bond market at an investment-grade rating
- Cash held abroad or in subsidiaries can be moved to where the debt is
- A sale of a business or asset already agreed brings the cash
What to look for in the filing
- Undrawn committed facilities and their covenants
- The cost and rating of the refinancing
- Restricted cash and the operating minimum
What would show the trap does not apply
- The 10-K lists an undrawn credit facility that covers the debt due, or the maturity is refinanced before it falls due
- Cash plus FCF of the next quarter exceeds the debt due within a year
Look again: next filing.
D03 EPS growth = profit growth Not triggered confidence high
EPS rose 41% and net income rose 30% in Q3 FY26; the share count fell 7.6%: EPS growth follows profit growth.
The figures and how they are read
| Quarter | Q3 FY26 |
| Quarter before | Q3 FY25 |
| EPS, year before | $7.40 |
| EPS | $10.45 |
| Net income, year before | $182M |
| Net income | $237M |
| Diluted shares, year before | 24.6M shares |
| Diluted shares | 22.7M shares |
| EPS growth | +41.2% |
| Net income growth | +30.5% |
| Diluted shares: change | -7.6% |
| eps from profit | $2.25 |
| eps from share count | $0.80 |
EPS and net income against the same quarter a year earlier; the EPS bridge attributes the change to profit first, then to the share count (the order is fixed and disclosed)
Source: Q3 FY26 (net income, diluted shares, EPS) · Q3 FY25 (the same quarter a year earlier)
E02 Low P/E at a cyclical peak = undervalued Not triggered confidence medium
Net income of $835M is a high, but the last eight years rose almost every year (median $429M): a steady climb, not a cycle's top, so the P/E of 19.4× is not on peak profit in that sense.
The figures and how they are read
| market value | $16.2B |
| net income ttm | $835M |
| pe ttm | 19.40 |
| net income median fy | $429M |
| pe mid cycle | 37.70 |
| net income peak fy | $835M |
| years | FY19 / 192.0; FY20 / 236.0; FY21 / 392.0; FY22 / 374.0; FY23 / 429.0; FY24 / 513.0; FY25 / 652.0; FY26 / 835.0 |
| down years in window | 1 |
P/E on the trailing twelve months' net income against the P/E on the median net income of the last eight fiscal years (a mid-cycle stand-in); 'at a peak' = this year's profit at or above 90% of the best year and at least 1.3× the median
Source: Q4 FY26 (net income, trailing twelve months)
E07 A precise DCF value = the true value To review confidence high
The DCF's point value is 1,003.70 a share (price 704.55); 77% of it is the terminal value, a number about years no one has seen. Moving revenue growth (each year) by ±5 pts alone takes it from 786.87 to 1,258.70; across every method the research ran the range is -83 to 1,787. The value is a range; the decimals are not information.
The figures and how they are read
| dcf value | 1,003.70 |
| price | 704.55 |
| terminal value share | +77.1% |
| swing by input | Revenue growth (each year) / ±5 pts / 786.87 / 1258.7; WACC / ±1 pt / 826.69 / 1250.3; Tax rate / ±5 pts / 922.72 / 1084.68; Operating margin / ±3 pts / 929.83 / 1077.56 |
| range all methods | -82.78; 1786.85 |
the DCF's point value against the share of it that is the terminal value and the value at each input moved by one step (growth ±5 pts, WACC ±1 pt, margin ±3 pts …); the range across every method the research ran
Source: 2026-11-08 (valuation research)
What would explain it innocently
- A stable, mature business with a narrow range of outcomes, where the point value is a fair summary
- The inputs that matter most are themselves well known (a regulated return, a long contract)
What to look for in the filing
- Which input you believe differs from the research's and why
- What the price implies for growth (the reverse DCF on the fair-value page)
What would show the trap does not apply
- The DCF's value is robust to the terminal growth and discount rate (the range's low end is still above the price)
- The company's cash flows over the next three years track the DCF's early years
Look again: next filing.
J06 A bank's low P/E and high profit = safe Not applicable
not a bank
J08 A REIT's low net income = the dividend is unsafe Not applicable
not a REIT
What the statuses mean
Triggered: the filings show the pattern; read the normal explanations and the missing evidence before concluding anything. To review: one quarter or a weak signal; a reader's judgement, not a pattern. Not triggered: the pattern is absent on these figures. Insufficient data: the filings read so far do not hold what the rule needs; this is not a clean bill. Not applicable: the rule is not meant for this kind of company (a bank's working capital, a loss-making quarter's EPS growth). Out of date: the latest filing is more than fifteen months old.
Severity is what the pattern could mean for cash, value or solvency; confidence is how reliable the inputs and the reading are. The two are kept apart.
Record a view
A reader's judgement, grounds, what would change it and the next review; kept in the browser (needs JavaScript).
Every rule and the companies it triggers on → Fair Isaac: cash flow → Earnings quality score →
Each rule reads the company's own filings by a fixed formula and says what would explain the same figures innocently. A triggered rule is a question to verify, not a finding of manipulation, and not a view on the stock. Missing data is shown as missing, never as clear. Not investment advice.