With Tax Season Here, Let’s Take a Look at Intuit (INTU), Parent of TurboTax

Stock (Symbol)

Intuit (INTU)

Stock Price

$610

Sector

Data is as of

Expected to Report

Company Description

Intuit Inc. offers financial technology platform that helps consumers and small and mid-market businesses prosper by delivering financial management, compliance, and marketing products and services.

It operates through four segments: Small Business & Self-Employed, Consumer, Credit Karma and ProTax. The Small Business & Self-Employed segment serves small businesses and the self-employed around the world, and the accounting professionals who assist and advise them.

Its offerings include QuickBooks financial and business management online services and desktop software, payroll solutions, time tracking, merchant payment processing solutions, and financing for small businesses.

Consumer segment serves consumers and includes do-it-yourself and assisted TurboTax income tax preparation products and services. Credit Karma segment serves consumers with a personal finance platform that provides personalized recommendations of credit card, home, auto and personal loans, and insurance products. Source: Refinitiv

Sharek’s Take

Intuit  makes financial, accounting, and tax software for individuals and small businesses. The company founded in 1983 and its first product was Quicken, a personal budgeting tool. Over the years, Intuit became well known for other popular products like QuickBooks, used by small businesses for accounting, and TurboTax, which helps people prepare and file their taxes. As of fiscal 2024, the company serves approximately 100 million customers. Intuit’s flagship products include:

• TurboTax, for consumer tax preparation and filing.
• QuickBooks, for bookkeeping, payroll, invoicing, and financial reporting
• Credit Karma, a personal finance platform for credit monitoring, loan recommendations, and budgeting.
• Mailchimp, an email marketing automation tool for businesses.

Intuit has four operating segments:

• Global Business Solutions (Small Business & Self-Employed:
  • 67% of total company sales, sales up 19% (year-over-year) last qtr.
  • This segment supports small and mid-market businesses with tools like QuickBooks and Mailchimp, offering bookkeeping, payments, and customer management solutions.
    • Online Services revenue grew 19%, driven by growth in money, payroll, and Mailchimp offerings.
    • QuickBooks Online Accounting revenue grew 22% in the quarter, driven by higher effective prices, customer growth, and mix-shift.
    • Total International Online Ecosystem revenue grew 9% on a constant currency basis.
• Consumer:
  • 13% of total sales, sales up 3% last qtr.
  • This segment focuses on individual financial needs, mainly through TurboTax, which helps consumers file their taxes accurately and efficiently.
• Credit Karma:
  • 13% of total sales, sales up 36% last qtr.
  • This segment is to help consumers manage their finances, with credit score monitoring, loan recommendations, and other financial tools.
  • Growth was driven by increased sales of credit cards, personal loans, and auto insurance.
• ProTax:
  • 7% of total sales; sales down 1% last qtr.
  • Serving professional accountants, ProTax provides specialized software to simplify and streamline tax preparation and filing for complex returns.
  • The revenue decline was due to factors like seasonality, tougher competition, and shifting customer needs in the tax market.

Intuit has a remarkable track record in growing profits on an annual basis. During the past two decades, profits (EPS) hit record highs every year except 2015 and 2009. Further back, INTU didn’t hit record profits in 2000, 2001 or 2002 as its software was sold in boxes on retail shelves and people cut back on spending after the 2000 stock market crash. Analysts give the stock an Estimated Long-Term Growth Rate of 14% a year, and INTU has a dividend yield of less than 1%. In Fiscal 2024, INTU paid $3.60 per share in dividends, totaling $1.0 billion, up from $3.12 per share or $900 million in 2023. INTU will be added to the Conservative Portfolio.

One Year Chart

Notice profits were up every year.

I think the stock is where it’s supposed to be with a P/E of 32. My Fair Value is a P/E of 32.

The Est. LTG is 14%. Not quite the 15% growth rate I look for in growth stocks, but this is a healthy growth rate for a conservative stock.

Qtrly profit growht has been erratic. But the average for the past four qtrs is a healthy 15%.

Earnings Table

There are some good highlights in the earnings call:

• In QuickBooks, AI turned things like emails and notes into invoices and bills, and handled accounting tasks in the background.
• Customers who used AI reminders paid their overdue invoices 10% more often than those who didn’t.
• For people doing taxes on their own, Intuit’s system now covers 90% of the most common tax forms, up from 68% last year.

Annual Profit Estimates increased for 2025. Note 2026 estimates are $22.21 and 2027’s are $25.29.

Qtrly Profit Estimates are for 10%, 30%, 19%, and 16% growth the next 4 qtrs. These are nice, healthy numbers. For the next qtr, analysts estimate sales growth will be 12%.

Fair Value

This stock isn’t a value. But it seems like a mid-teens grower and those are hard to come by.

Bottom Line

Intuit (INTU) has a very nice ten-year chart. The stock went on a parabolic move higher in 2021 as a lot of stocks did. The stock then pulled back, digested its gains, and has now pushed higher again.

INTU is a quality company with a nice recurring revenue stream. It’s products are segment leaders, and I like how the company can raise prices a little each year if they want.

INTU will be added to the Conservative Portfolio. The stock will rank 12th of 22 stocks in this portfolio’s Power Rankings.

Power Rankings

N/A

Aggressive Growth Portfolio

N/A

Conservative Growth Portfolio

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