Yesterday, in our paid post — Four Quality Stocks in the Valley: A Disciplined Look at Timing, we highlighted Fair Isaac (FICO) as a franchise under pressure. U.S. mortgage regulators had opened the door to rival VantageScore 4.0, developed by the three big credit bureaus — Equifax, TransUnion, and Experian — and we viewed FICO as the incumbent facing margin risk.
The post can be obtained here.
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Today’s post is free for all reader.
In the last 24 hours the story flipped.
FICO announced it will license its scores directly to mortgage resellers, bypassing the bureaus’ traditional role as middlemen.
The market’s reaction was swift:
· FICO +23%,
· while the bureaus sold off — Equifax –7%, TransUnion –11%, Experian –6-8% (London).
None of the four stocks are cheap. (Big surprise in today’s market)
· FICO’s rally lifts its trailing P/E to roughly 73×,
· Equifax has eased back to around 52×,
· TransUnion to about 46×,
· Experian to roughly 36×.
However, all four remain below their 52-week high.
· FICO, despite the rally, is still about 37% below its peak near $2,402.
· Equifax sits roughly 20-25% below its high around $295.
· TransUnion is about 20-30% below its peak near $113,
· Experian in London remains about 5-10% under its high around 4,021 pence.
I’m not chasing the moves, but I’m also not ruling out adding exposure to the bureaus, especially as a hedge to FICO.
Of the three, Equifax (EFX) looks most interesting here: it has the broadest data and analytics platform, and the scale to adapt if FICO’s direct model faces push-back.
But any incremental buying still comes with the caveat that the competitive environment is in flux.
This free note is meant to give all readers a timely snapshot of how quickly the story can turn.
There is also now a coupon for a free month to the paid service.
https://bernsteinbook1958.substack.com/subscribe?coupon=fb965b7d