We recently published a list of the 12 Stocks to Buy That May Be Splitting Soon. In this article, we are going to take a look at where Fair Isaac Corporation (NYSE:FICO) stands against other stocks that may be splitting soon.
Stock splits change the number of outstanding shares of a company, but not the company’s overall value. A forward split makes each share cheaper and easier to buy. Splits can range from 2-for-1 to 100-for-1 or more. In a 2-for-1 split, one share becomes two by cutting the price in half. For instance, a $100 share becomes two $50 shares. This makes shares more affordable and attracts more investors. Even though the price per share drops, the total value held by shareholders stays the same. So, splits don’t change who controls the company. The main reason for a split is to make the stock more appealing, or accessible for retail investors.
Uncertainty is Driving Selloff
Dan Suzuki, Deputy CIO at Bernstein Advisors, joined CNBC’s ‘Squawk on the Street’ on March 14 to share his perspective on the recent persistent three-week downtrend in the indexes during an interview. He explained that the sell-off is largely driven by uncertainty and its negative impact on sentiment. According to Suzuki, analyzing market movements reveals that the stocks that rallied most after the election until mid-February have seen significant declines since then and create a mirror image effect. Additionally, the most expensive and high-beta stocks have been hit hardest as the market prices are in an uncertainty risk premium. These dynamics are central to what is driving markets currently. Despite this, Suzuki noted that hard economic data remains strong and suggests that relief from headline uncertainties could reduce the risk premium.
Suzuki noted concerns over soft retail sales and spending figures, which might be due to weather or seasonal factors. However, he highlighted resilience in weekly retail sales and strong leading indicators. Prolonged uncertainty could still impact growth. Suzuki linked consumer trends to disappointing corporate guidance and persistently high inflation, which affected sentiment. He also pointed out the wealth effect caused by a stock market decline of 10% or more, particularly for investors in crowded names. Markets are adjusting to persistent uncertainty, which will continue even with relief anticipated within the next month or two, which will prevent a return to the high multiples seen in 2020-2023.
In an uncertain market with heightened risk premiums, companies considering stock splits may need to weigh the potential benefits against the backdrop of overall market sentiment. The ongoing economic uncertainty and changes in consumer behavior might impact how companies approach decisions about stock splits, especially if they are concerned about maintaining investor confidence in a volatile market.
Methodology
We sifted through ETFs, online rankings, and internet lists to compile a list of the top stocks that were trading over $400 as of March 17. We then selected the 20 stocks with high surges in their share prices in the past 5 years and a history of stock splits. From that, we picked the top 12 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A hands-on approach: technicians working on data management products in an open lab space.
Fair Isaac Corporation (NYSE:FICO)
Share Price as of March 17: $1,799.90
Surge in Share Price in 5 Years: 645.52%
Stock Split Confirmed: No
Number of Hedge Fund Holders: 60
Fair Isaac Corporation (NYSE:FICO) develops analytics and digital decisioning software for businesses globally. Operating through its Scores and Software segments, it provides credit scoring solutions and a range of analytical and decision management software. This includes the FICO Platform to automate and enhance business decisions across various sectors.
Its Scores segment is a major revenue generator, especially in the B2B area. In FQ1 2025, this segment’s revenue hit $236 million, which was a 23% increase year-over-year. The B2B side saw a 30% jump largely due to mortgage origination revenues, which skyrocketed by 110%. Mortgage-related revenue made up 44% of B2B revenue and 34% of the total Scores segment.
This growth is driven by the adoption of FICO Score 10 T, which is an advanced credit scoring model designed to provide lenders with a more precise assessment of credit risk, particularly in mortgage lending. Clients using this score represent a huge amount of mortgage originations and servicing. Loans using this score are now traded on the MCT Marketplace, and a mortgage-backed security using FICO Score 10 T was created. Fair Isaac Corp. (NYSE:FICO) is innovating and working on incorporating Buy Now Pay Later data into scores and developing a mortgage simulator.
Carillon Eagle Mid Cap Growth Fund stated the following regarding Fair Isaac Corporation (NYSE:FICO) in its Q3 2024 investor letter:
“Fair Isaac Corporation (NYSE:FICO) provides predictive analytics and data management products and services that enable businesses to automate, improve and connect decisions. The stock performed well during the period as quarterly earnings were strong and guidance was lifted. The quarter was highlighted by continued pricing gains in the company’s Scores business. Additionally, expectations of increased residential mortgage activity as interest rates move lower also aided the stock.”
Overall, FICO ranks 8th on our list of the stocks that may be splitting soon. While we acknowledge the growth potential of FICO as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than FICO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
