Intuit Inc. (INTU)

They beat top and bottom lines, but missed guidance so it's been down. Likes it.

INTU is trading at 35.8x Forward P/E. The business is expected to grow its topline organically by around 12% over the next few years. INTU is a very high-quality business that generates solid, growing cash flow year after year, but the valuation is not cheap. We like the stock and we are okay to average into INTU over time, but we would not be buying too aggressively here. It reported last night: EPS of $1.99 beat estimates of $1.85; revenue of $3.18B beat estimates of $3.08B. Intuit exceeded fiscal 4Q consensus on revenue growth at Credit Karma (up 14%) and its Small Business and Self-Employed (SBSE) segment (up 20%), with Online Services also a driver -- up 19% on payroll, payments and Mailchimp. QuickBooks Online accounting sales were solid (up 17%), fueled by customer additions, higher prices and product mix shift. The company set fiscal 2025 sales-growth guidance of 12-13% vs. 12% consensus, with SBSE at 16-17%, Consumer Group (TurboTax) at 7-8% and Credit Karma at 5-8%. Management stated a long-term sales view for SBSE of 15-20%, emphasizing average revenue per customer gains on an upmarket push. Credit Karma sales growth (up 14%) was a highlight, with auto insurance accounting for 6 percentage points, personal loans for 5, credit card for 2 and CK Money for 1.
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They report next week. We need to see revenue grow accelerate (11% last quarter, 23% in last three years). Was downgraded today.

Hesitant because TurboTax is a large part of this company. In some countries, tax software is already embedded in government data. If that were ever to come to NA, huge product risk.

Likes it, but shares slid over 2.5% on layoffs news which are AI-related. Enterprise software may be seeing a slowing. Valuations for these stocks is declining and are paling next to hardware stocks (except Microsoft).

EPS of $9.88 compares to estimates $9.38; sales of $6.73B beat estimates of $6.64B. Intuit exceeded fiscal 3Q consensus due to 18% revenue growth in its Small Business and Self-Employed (SBSE) segment, with Online Services a driver -- up 19% on payroll, payments and Mailchimp. QuickBooks online accounting was solid (up 19%), fueled by higher prices, customer growth and a shift in product mix. The company raised its fiscal 2024 sales-growth guidance to 13% vs. 11-12%, but Consumer Group (TurboTax) guidance was maintained at 7-8%, with its AI initiatives for the Assisted Tax and Business segments in the early stages. A decline in the low-end tax-filer segment was a negative surprise, yielding a 80-bp decline in market share. Credit Karma sales growth (up 8%) pushed against the headwinds from higher interest rates on personal, auto and mortgage loans. There is always going to be competition, government or otherwise, but the company's dominance should help it. Tax of course is not its only business. Consensus still calls for EPS in 2025 to still more than double from 2023 levels. We think it is more of a BUY today.
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Markets are lofty, if not exactly frothy, right now. Trading around $630, 12-month target of $717. February reporting beat on top and bottom, raised guidance. We're going into tax season, and this is where the company really makes their hay. Yield is 0.6%.

Total online payments are up 20%.

The CEO is doing a great job, but the stock is 5-8% ahead of itself. Also, he expects the market to take capital gains in January, so wait till then before buying when you see the true colours of stocks.

A play on small business which baosted 50% EPS growth in the last quarter.

QuickBooks is the major driver of growth. Management reiterated growth around a strong mid-teens. It reports next week.

They started using AI 5 years ago, and have now introduced Intuit Assist, an AI tool for customers.

Companies like this need new businesses (to become clients), but if were heading into a recession there are fewer businesses. So, this is a challenge for INTU. Over 5 years, maybe this is okay, but their PE is now at a high 40x. If want to buy, buy a small position.

She just bought Intuit. PE isn't cheap, but it has a competitive advantage because they operate in tax and accounting, areas which are more resilient in a recession if enterprise spending slows. Also, they offer better margins in their online where most of their revenues lie.

A great, long-term company, great because it is invaluable to small businesses. The chart shows a head-and-shoulders pattern.