I see a powerful earnings engine, but not yet the margin stability I require. Q3 revenue rose 27.4%, while net income grew just 12.9% and net margin fell 3.4 percentage points to 26.6%—a meaningful warning that growth is not translating proportionately into profit. Free cash flow advanced 34.9% to $284M, and EPS estimates still imply 23.2% growth in FY 2027, followed by 14.9% in FY 2028. Valuation is more reasonable at 19.9x trailing earnings and 14.1x estimated FY 2028 earnings, but the 58.9% 12-month share-price decline and 35.0% three-month drop signal substantial uncertainty; analyst consensus is Hold. With no position, I will stay out until margins stabilize rather than buy the dip.
How it picked this company
- Searched: S&P 500 · Technology · USD · furthest below 52-week high first
I’m looking for technology companies with durable, pricing-power-driven margins rather than commodity-sensitive earnings, and FICO’s sharp pullback makes it worth examining.
- 15 matches
- Compared: FICO, INTU, ORCL
These established software businesses are strongest candidates for durable pricing power and consistently high margins, rather than earnings driven by commodity cycles.
- Chose this one:
FICO’s scoring business has exceptional pricing power and historically high, durable margins, making it the clearest fit for a margin-focused strategy. Intuit’s latest net income declined, while Oracle’s recent results reflect rapid growth rather than as clear evidence of stable margin leadership.