Tax and accounting software giant Intuit (INTU) faces a changing market and economy. Skeptics will wonder if Intuit could collapse because changes in the software business.
Most people know Intuit for the popular TurboTax tax preparation software and the QuickBooks accounting software. However, Intuit Inc. (INTU) also owns Credit Karma, Mint Software, and several other companies.
Some of Intuit’s products are popular. For instance, Mint.com, a simple personal finance solution, had over 20 million users in November 2022, InvestorJunkie estimates. Another Intuit subsidiary, Credit Karma, claimed to have to 77 million users in May 2022.
How Much Money does Intuit Make?
Intuit is a growing company, but it makes small amounts of money. For example, Intuit reported a quarterly operating income of $76 million on 31 October 2022.
The quarterly operating income fell from $195 million on 31 October 2021, but rose from -$75 million on 31 July 2022. Yet Intuit can generate enormous amounts of money. It reported a $2.395 billion quarterly operating income on 30 April 2022 after the 2022 tax season. To explain, Intuit makes most of its money during the US tax season when Americans have to file a tax return to get a refund.
However, Intuit is a profitable company. For example, Intuit reported a $1.8 billion quarterly gross profit on 31 October 2022. The quarterly gross profit rose from $1.693 billion on 31 July 2022 and $1.537 billion on 31 October 2022. The quarterly gross profit rose to $4.687 billion on 30 April 2022 at the end of the tax season.
Intuit has Less Cash and More Debt
Intuit (NASDAQ: INTU) had a $2.724 billion in cash and short-term investments on 31 October 2022. The cash and short-term investments fell from $3.904 billion on 30 April 2022 and $3.25 billion on 31 October 2021.
Thus, Intuit is not keeping cash. However, it borrows. Intuit reported a quarterly financing cash flow of $3.835 billion on 31 January 2022. The quarterly financing cash flow fell to -$931 billion on 31 October 2022.
Moreover, Intuit’s total debt grew from $2.507 billion on 31 October 2021 to $7.601 billion on 31 October 2022. Thus, Intuit has less cash and more debt.
What Value does Intuit Offer?
Conversely, Intuit’s value is grouping. For example, Intuit’s Total Assets grew from $14.87 billion on 31 October 2021 to $27.085 billion on 31 October 2022. Hence, Intuit’s total assets grew by $12.215 billion in a year.
That’s impressive because Intuit’s quarterly revenues grew from $2.007 billion on 31 October 2021 to $2.597 billion on 31 October 2022. The quarterly revenues grew to $5.632 billion on 30 April 2022.
Inuit is growing fast. The revenues grew by 29.4% in the quarter ending on 31 October 2022. The revenue growth hit 69.61% in the quarter ending on 31 January 2022.
Intuit is a grossly Overpriced Stock
Thus, Inuit is capable of impressive growth, but I don’t think that growth justifies the $399.83 Mr. Market paid for INTU on 9 December 2022. The share value fell from $646.24 on 6 December 2022. Instead, I think Mr. Market grossly overprices INTU.
Moreover, I don’t think the ten 78₵ quarterly dividends Intuit (INTU) scheduled between 18 January 2023 and 7 January 2025 justify Intuit’s share price. Intuit shares offered a $3.12 forward dividend and a 0.78% forward dividend yield on 9 December 2022.
I think Intuit is an overpriced software company investors need to survive. However, I don’t think Intuit will collapse.
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