Is This Financial Powerhouse a Bargain Hiding in Plain Sight?

Many financial stocks are quiet, solid powerhouses that don't get a lot of attention but offer fabulous opportunities.

Consider Fair Isaac (NYSE: FICO), the leading credit evaluation company. You might know it because of the ubiquitous FICO score that often determines your creditworthiness, but behind the score is a financial giant that's been a pretty reliable market-beater until recently.

Let's see why Fair Isaac has a fantastic business, why it's down right now, and whether or not it's a bargain at the current price.

The undisputed leader in its space

Fair Isaac has no major competition in the credit evaluation space. Its platform is used by 90% of U.S. lenders, and that means all lenders, not just banks. It claims that it is the most predictive scoring model, and the only scoring model that has been through a full economic cycle; it's been in use for 35 years.

Image source: Getty Images.

That gives it unmatched data in an industry fueled by data. And in an age where there are artificial intelligence (AI) disruptors everywhere, it has fully embraced AI to improve its products. In addition to the credit scoring products, Fair Isaac offers data analytics, fraud detection, and a risk management platform for clients.

Since it's the established name in credit scoring with decades of relationships, clients trust it, especially in challenging economies. It has been reporting strong performance, with a 39% year-over-year increase in revenue in the 2026 fiscal second quarter (ended March 31). Scores revenue was up 60% and accounted for about two-thirds of the total, while software revenue was up 7%. Earnings per share increased from $6.59 to $11.14.

The fall of the SaaS stock

There are several reasons Fair Isaac stock has been falling despite its phenomenal performance. One is a loss of confidence in software-as-a-service (SaaS) stocks as the market considers how AI agents can be trained to handle many of the tasks SaaS companies do. The SaaS companies have been fighting back, arguing that AI amplifies their businesses rather than taking them away. It's yet to be seen whether or not these companies still have an edge and can survive agentic AI or not, but it's a concern.

Fair Isaac's main business isn't SaaS, but there are other concerns there, including competition and regulatory issues. The Federal Housing Finance Agency has been trying to break Fair Isaac's near-monopoly in the mortgage market, pushing use of the competition. Smaller AI-driven companies like Upstart have been trying to break into the market as well. Recently, there's been government scrutiny about antitrust laws and excessive pricing practices. Fair Isaac has been revamping many of its product lines with improved pricing policies that it claims help make home buying more affordable.

Fair Isaac stock is down 39% this year, a rare market underperformance. It trades at a P/E ratio of 33, less than half the three-year average of 69. The stock is usually expensive because it's so reliable. That's why Fair Isaac stock looks like a bargain today for the long-term investor.

Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Upstart. The Motley Fool recommends Fair Isaac. The Motley Fool has a disclosure policy.