NEW YORK ( TheStreet) -- Fair Isaac (NYSE: FICO) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, growth in earnings per share, attractive valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- Net operating cash flow has slightly increased to $32.88 million or 5.19% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -14.99%.
- FAIR ISAAC CORP has improved earnings per share by 8.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, FAIR ISAAC CORP increased its bottom line by earning $1.43 versus $1.34 in the prior year. This year, the market expects an improvement in earnings ($1.81 versus $1.43).
- The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- The revenue growth came in higher than the industry average of 7.6%. Since the same quarter one year prior, revenues slightly increased by 2.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.