Intuit (INTU), which you might recognize for its tax preparation software like TurboTax and QuickBooks and market software like Mailchimp, has trailed behind the broader market over the past year. Its shares have risen about 10% over the past year, lagging behind the S&P 500’s (SPX) 28% gain during the same period. In my view, this contrast may present an intriguing buying opportunity. As Intuit embarks on Fiscal 2025 with strong momentum and its stock trades at what seems to be a fairly attractive valuation, optimism around the company’s prospects is well-founded. Accordingly, I am bullish on INTU stock.
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Intuit’s Strong Start to Fiscal 2025
To begin with, I find it quite baffling that Intuit’s underperformance has taken place despite the company maintaining strong momentum in recent quarters. Intuit’s latest Q1 FY25 results further reinforced this trend, showcasing its continued strength and launching Fiscal 2025 on a high note. Specifically, the company posted $3.3 billion in revenues, up 10% year-over-year. Key drivers included a 20% growth in Online Ecosystem revenue within the Global Business Solutions Group and a 29% growth from Credit Karma.
Segment-wise, the Online Ecosystem thrived due to solid customer acquisition, higher effective pricing, and a favorable product mix. Within QuickBooks, innovations like AI-powered Intuit Assist have enabled faster financial processes, improving client retention and adoption. This tool, which is now available to all U.S.-based QuickBooks Online customers, offers businesses features like automated invoice reminders and real-time cash flow insights, emphasizing the tangible benefits of AI integration in Intuit’s suite.
Finally, Credit Karma’s success was fueled by personal loans, credit card offerings, and auto insurance boosted by targeted marketing strategies. Seeing these developments, I believe that Intuit demonstrated its ability to leverage AI and data-driven solutions to effectively empower both businesses and individuals, which is what Wall Street should want to see in the current market environment.
Exceptional Earnings Growth Points to Another Record Year
In the meantime, Intuit’s scalable business model maintained strong margins, strengthening my bullish outlook on the stock. For Q1 FY25, Intuit’s adjusted EPS rose to $2.50, slightly exceeding $2.47 from the prior year. Sure, this doesn’t seem like a meaningful jump. However, what you have to take into account is that this is a seasonally low quarter for the company. The majority of INTU’s full-year earnings are shaped by its peak season—tax season—and management’s outlook suggests that this is shaping up to be another outstanding year for the company.
Specifically, the company anticipates adjusted EPS to grow by 13-14% in Fiscal 2025, driven by expanding market share in mid-sized enterprises and rising adoption of integrated solutions. Also, with progress in AI-enhanced accounting and tax preparation automation, management anticipates that it will achieve a margin expansion, which should also contribute to the bottom-line gains.
INTU’s Valuation Reflects an Attractive Entry Point
Intuit’s valuation of 34x forward earnings may appear steep at a glance. However, I believe that this multiple is justified by the company’s consistent EPS growth, which is expected to remain in the double-digits at least through the end of the decade.
Moreover, historically, Intuit has commanded even higher multiples—often in the high 30s and low 40s—which, to some extent, makes sense given its utter dominance in the tax preparation space. The premium valuation, therefore, reflects Intuit’s durable competitive edge, too.
Furthermore, I think it’s worth noting that Intuit’s expansion into mid-market enterprise solutions and its growing integration of AI-driven tools position it to capture an increasing share of the $300 billion total addressable market for small and medium-sized business platforms. Merging all these factors, I believe the current valuation offers investors a compelling entry point into a high-growth, resilient business.
Is INTU Stock a Buy, According to Analysts?
Wall Street analysts appear quite optimistic about Intuit’s future prospects from here. Specifically, Intuit stock features a Strong Buy, with analysts’ ratings of 16 Buys and four Holds over the past three months. At $739.83, the average INTU stock forecast implies a 10.33% upside potential.
For the best guidance on buying and selling INTU stock, look to Scott Schneeberger from Oppenheimer. He is the most profitable analyst covering the stock (on a one-year timeframe), boasting an average return of 27.92% per rating and an impressive success rate of 86%.
Summing Up
To sum up, Intuit’s momentous start to Fiscal 2025, driven by double-digit revenue growth, innovative AI-powered solutions, and solid performance across segments like Credit Karma and QuickBooks, highlights its growth potential in an ever-evolving tech landscape. Despite its shares underperforming the broader market, I believe that its ongoing earnings growth and relatively attractive valuation form a compelling investment case.
Intuit stock has rarely, if ever, traded at a discount, indicating that its valuation is unlikely to compress further. This is why I feel that the current price offers a compelling entry point for investors.
