Intuit Stock: Is Intuit a Buy with Tax Season Around the Corner?
It’s almost that time of year again. And I’m not talking about the holidays. It’s tax season! With this in mind, Intuit stock is down over 10% since its latest earnings release.
Intuit (Nasdaq: INTU) is trending in the wrong direction despite beating top and bottom-line estimates. At the same time, INTU shares are still up 73% this year while remaining in all-time high territory.
Higher yearly revenue in nearly every segment is helping drive Intuit stock to new highs. More importantly, the financial services company is accelerating its growth. But, with tax season around the corner, is Intuit stock a buy or sell?
How Does Intuit Make Money?
Most people will know Intuit from its well-known financial service offerings. The company’s technology platform powers five of the biggest names in finance. These include:
- TurboTax – Complete services to help users file taxes.
- QuickBooks – Accounting software solutions for small & medium-sized businesses.
- Mint – Online budget planning & tracking.
- Credit Karma – Credit score monitoring.
- Mailchimp – All-in-one marketing solutions for small & medium-sized enterprises.
Intuit’s services are designed to be easy to use so that anyone can access the help. Moreover, the platform’s technology uses AI and machine learning to give users personalized feedback.
Even more, the simple user interface attracts users who may be hesitant to use the software otherwise. In fact, Intuit is trusted by more users than any other brand for its tax, small business accounting and personal finance needs.
Not only that, but Intuit’s recent acquisition of Mailchimp shows the company is aggressively cornering the small business market.
Over the past few years, there has been a recent wave of people turning to digital services. Intuit stock is in the perfect position to continue its dominant growth.
Big Earnings Boosts Intuit Stock
Intuit’s first-quarter results show the company is using its platform effectively to cross-sell its services. Most important, the company’s vision of being the “small business center of growth” is now coming together with the additions of Mailchimp and Credit Karma.
The fintech company operates out of four units. These include:
- Small Business & Self Employed
- Credit Karma
So far, the company is crushing its targets while raising guidance going forward. Here are a few takeaways from the report.
In the fiscal first quarter of 2022, Intuit’s revenues rose 52% from last year to reach $2 billion. The sales growth is driven by higher demand for Small Business support. It’s up 22% in Q1 to $1.44 billion.
Also, the addition of Credit Karma is helping boost total revenue further. With record revenue reaching $418 million, the unit looks like a solid investment for future growth. Not only that, but it’s also helping promote its other services.
The company is creating new revenue streams that lead to a complete ecosystem for small businesses. As a result, Intuit posted a net income of $228 million or 0.82 earnings per share (EPS).
Keep reading for more on Intuit stock.
Core Business Growth
New business ventures are helping create new revenue streams. And Intuit’s core business is also seeing higher demand. That said, revenue for the company’s core product QuickBooks grew 32% year-over-year (YOY).
With this in mind, Intuit is focusing on growing its core business in three stages. First, develop its main services. Secondly, connect the ecosystem. And lastly, expand its market share globally.
So far, the strategy is paying off as online services are seeing higher demand, up 42% since last year. Not to mention its international online revenue also increased 39%.
The quarter is a big step in the right direction for a company looking to expand its global footprint. CEO Sasan Goodarzi had this to say “We continue to see strong momentum and proof that our Big Bets are furthering positioning us for durable growth in the future.”
Intuit Stock Analysis
Intuit stock is still down 11% since releasing the report despite easily surpassing expectations. At the same time, overall market weakness is dragging the market down. Particularly, higher valued online companies.
Keeping this in mind, Intuit’s biggest season is coming up when the company generally sees the highest sales.
But this year might look different, with Intuit stock rallying all year to all-time highs. Even with the stock cooling off this past month, it’s still relatively expensive. Intuit is currently rocking a price to earnings (P/E) ratio of 82.76. Compared to one of its biggest competitors, Deluxe Corporation (NYSE: DLX), with a P/E of 17.63, Intuit stock still looks overbought.
Yet Deluxe doesn’t have quite the operation Intuit does, especially now with Credit Karma.
Intuit Stock Forecast – Is It Time to Buy?
With Intuit growing into a global corporation, its services are now helpful for small businesses worldwide. On top of this, the ease of use and simple platform allows anyone to get the financial help they need.
Not only that, but solid business execution is improving the company’s profitability. And now, with the additions of Credit Karma and Mailchimp, the company has the tools it needs to continue growing.
With this in mind, the average price target for Intuit stock is $756.29, showing an 18% upside. And with the company’s strongest season coming up, don’t count the stock out just yet.
Considering everything, Intuit is in a strong position going into 2022. With new, popular services, the company should see continued momentum.
And with promising dividend growth the past few years, Intuit is an all-around solid investment. The company is expecting revenue growth of 73% to 74% in Q2, so investors should continue seeing the benefits.
About Pete Johnson
Pete Johnson is an experienced financial writer and content creator who specializes in equity research and derivatives. He has over ten years of personal investing experience. Digging through 10-K forms and finding hidden gems is his favorite pastime. When Pete isn’t researching stocks or writing, you can find him enjoying the outdoors or working up a sweat exercising.