Intuit Stock Forecast: Is it a Buy Right Now?
Intuit (Nasdaq: INTU) stock has been growing its sales and profits every year since 2016. This article will take a closer look at Intuit stock forecast, and then, at the end you can see if it’s the right investment for you. You may know of the company from its popular personal income tax filing service TurboTax. The platform allows users to file their annual income taxes quickly and easily every year. After signing up and entering your personal information, the platform can pre-fill tax forms for later years.
In addition, employers can allow TurboTax to pull income information directly into the platform. The ease with which TurboTax customers can file their taxes has attracted customers to return to the service year after year.
Though TurboTax is a big part of Inuit’s business, there is more to the story. Inuit also sells accounting services on its QuickBooks platforms. Small and medium accounting firms love the ease and convenience of QuickBooks. In addition, QuickBooks can link to customers’ bank accounts and reduce the need for printed receipts for accounting.
Inuit’s success with TurboTax and QuickBooks has allowed the company to enter other areas of small business owners. Over the past few years, Intuit has acquired Credit Karma and Mailchimp.
Credit Karma is a platform for customers looking for auto loans, home mortgages, credit cards and other loans. Mailchimp is an online email marketing service offered to small and medium businesses.
Intuit Stock Forecast
An Intuit stock forecast reveals that more growth may be in store for the company. Earlier this year, managers at Intuit gave investors guidance for their full fiscal year, which ends July 31, and the third fiscal quarter, which ends April 30. Keep in mind that Intuit completed its purchase of Mailchimp in the second fiscal quarter.
The guidance showed that Intuit thinks its full-year sales will grow between 26% and 28% to over $12 billion. The sales guidance includes a full year of Credit Karma that Intuit acquired in December 2020. In addition, Mailchimp’s sales are included in guidance starting in the second fiscal quarter.
Intuit’s guidance went on to say that the company thinks adjusted earnings per share will grow 18% to 20% to a range of $11.48 to $11.64. Intuit thinks sales will grow between 32% and 33% for the third quarter. And the company also thinks that adjusted earnings per share will be between $7.51 and $7.57.
Industry analysts are less optimistic in their forecasts. On average, the analysts think Intuit’s earnings per share will be $8.14. For the third fiscal quarter, the analysts think earnings per share will come in at $6.70. Both forecasts are below Intuit’s guidance.
Intuit will report third-quarter results on May 24, at 1:30 p.m. Pacific Time managers from Intuit will host a webcast to talk about the results and take listeners’ questions. You can find a link to the webcast here.
Is Intuit Stock a Good Buy?
Intuit has two of the U.S.’s most widely used personal finance platforms in TurboTax and QuickBooks. The acquisitions of Mailchimp and Credit Karma give the company the chance to cross-sell the new services to customers that already use TurboTax and QuickBooks.
These things may give you comfort that Intuit stock is a good buy. However, a valuation of the stock shows that shares may be expensive. For instance, if Inuit’s full-year earnings per share fall in line with their guidance, the shares trade at a forward P/E ratio of over 31x.
Value investors may find the P/E ratio too high, but growth investors may be okay with it considering the company’s strength. In addition, Intuit stock pays a small dividend yield of about .73%.
Another thing for you to think about is that growth stocks have fallen this year. Intuit’s stock is down over 43% this year. If growth stocks like Intuit continue to fall, the stock’s valuation will improve.
Keep reading for more info on Intuit stock forecast.
Intuit Stock Earnings
On February 24, Intuit put out a press release about its second-quarter results, which ended January 31. The press release said that sales for the quarter rose 70% over the same quarter last year. If the sales from Mailchimp and Credit Karma (which Intuit did not own a year ago) were omitted, sales grew 39%.
Sales at Credit Karma set a quarterly record of $444 million. In addition, non-GAAP earnings per share 128% to $.68 for the quarter. Interestingly, industry analysts thought Intuit stock forecast would report earnings per share of $.93. So, Intuit missed analysts’ forecasts for the quarter.
Inuit used the quarter’s profits to add value for shareholders. The company bought back $519 million of stock and paid a quarterly dividend of $.68 per share. The dividend was a 15% increase over the dividend from the same quarter last year.
In the press release, CEO Sasan Goodarzi said, “Our platform continues to thrive as digitization is more important now than ever. As we move through tax season, we’re proud to help customers get the biggest refund they deserve.”
After the results were released, managers from Inuit hosted a webcast to talk about the results. After they spoke, the managers took questions from listeners. You can find a link to the replay of the webcast here.
Intuit Sued by FTC
In March, the Federal Trade Commission (FTC) sued Intuit due to the company’s ads, which said TurboTax could be free to many customers. Though most folks who thought the service would be free of charge found that the service was not free. The FTC says the ads, which ran during the SuperBowl and March Madness, directed tax filers to use the IRS Free File Program, then redirected the filers to paid services.
Intuit quickly issued a press release saying that it would challenge the complaint by the FTC. In the release, Intuit’s Executive Vice President and General Counsel, Kerry Mclean, said, “While it is disappointing that the FTC chose to file this lawsuit, we look forward to presenting the facts in court and are confident in the merits of our position.”
Later, the New York attorney general said Intuit had agreed to pay $141 million to customers deceived by the ads. The payments will go to 4.4 million filers who used TurboTax. In addition, Intuit will stop the ads promoting free tax filing services.
About BJ Cook
BJ Cook is a long-time stock nerd. He has held several roles in the equity research world and earned the right to use the CFA designation in 2014. When he’s not writing for Investment U, you can find him searching for new investment ideas. Outside the investment community, BJ is a die-hard Cubs fan.