Intuit Inc Valuation – January 2016 Update $INTU

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor - November 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Intuit Inc (INTU) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Intuit Inc. is a provider of business and financial management solutions for small businesses, consumers and accounting professionals. The Company operates through three segments: Small Business, Consumer Tax and Professional Tax. The Company operates in the United States, Canada, India, the United Kingdom, Singapore and Australia, among others. The Company’s Small Business segment solutions include QuickBooks Online, Online Payroll solutions, Online Payments solutions and Intuit Developer Group. The Company’s Small Business Desktop Ecosystem solutions include QuickBooks, Desktop Payroll Solutions, Desktop Payments solutions, QuickBooks Technical Support and financial supplies. The Consumer Tax segment offers tax return preparation offerings, electronic filing and other services, and Intuit Tax Freedom Project. The Company’s professional tax offerings include Lacerte and ProSeries.


To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.


Downloadable PDF version of this valuation:

ModernGraham Valuation of INTC

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $24,713,450,045 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.76 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 96.25% Pass
6. Moderate PEmg Ratio PEmg < 20 34.41 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 23.74 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.76 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -1.09 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

INTC value chart January 2016

EPSmg $2.67
MG Growth Estimate 4.72%
MG Value $47.82
Opinion Overvalued
MG Value based on 3% Growth $38.66
MG Value based on 0% Growth $22.66
Market Implied Growth Rate 12.95%
Current Price $91.73
% of Intrinsic Value 191.81%

Intuit Inc does not qualify for either the Enterprising Investor or the more conservative Defensive Investor.  The Defensive Investor is concerned with the low current ratio, short dividend history, and the high PEmg and PB ratios.  The Enterprising Investor is concerned by the level of debt relative to the current assets.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities at this time or proceed with a cautious speculative attitude.

As for a valuation, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $2.03 in 2012 to an estimated $2.67 for 2016.  This level of demonstrated earnings growth does not support the market’s implied estimate of 12.95% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Intuit Inc (INTU)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

INTC charts January 2016

Net Current Asset Value (NCAV) -$4.98
Graham Number $17.58
PEmg 34.41
Current Ratio 0.76
PB Ratio 23.74
Dividend Yield 1.14%
Number of Consecutive Years of Dividend Growth 2



Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information Oct15
Total Current Assets $1,427,000,000
Total Current Liabilities $1,887,000,000
Long-Term Debt $500,000,000
Total Assets $3,833,000,000
Intangible Assets $1,351,000,000
Total Liabilities $2,782,000,000
Shares Outstanding (Diluted Average) 272,000,000

Earnings Per Share History

Next Fiscal Year Estimate $3.45
Jul15 $1.28
Jul14 $3.12
Jul13 $2.83
Jul12 $2.60
Jul11 $2.00
Jul10 $1.77
Jul09 $1.35
Jul08 $1.41
Jul07 $1.24
Jul06 $1.16
Jul05 $1.01
Jul04 $0.79
Jul03 $0.81
Jul02 $0.32
Jul01 -$0.20
Jul00 $0.73
Jul99 $0.97
Jul98 $0.02
Jul97 $0.25
Jul96 -$0.08

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.67
Jul15 $2.30
Jul14 $2.70
Jul13 $2.36
Jul12 $2.03
Jul11 $1.68
Jul10 $1.47
Jul09 $1.30
Jul08 $1.22
Jul07 $1.08
Jul06 $0.94
Jul05 $0.74
Jul04 $0.57
Jul03 $0.48
Jul02 $0.33
Jul01 $0.34
Jul00 $0.53

Recommended Reading:

Other ModernGraham posts about the company

Intuit Inc. Analysis – October 2015 Update $INTU
Intuit Inc. Analysis – July 2015 Update $INTU
Intuit Inc. Quarterly Valuation – April 2015 $INTU
58 Companies in the Spotlight This Week – 1/31/15
Intuit Inc. Quarterly Valuation – January 2015 $INTU

Other ModernGraham posts about related companies

Oracle Corporation Valuation – January 2016 Update $ORCL
Ansys Inc. Valuation – November 2015 Update $ANSS
Yahoo! Inc. Valuation – November 2015 Update $YHOO
Microsoft Corporation Valuation – November 2015 Update $MSFT
Cisco Systems Inc. Valuation – November 2015 Update $CSCO
Alphabet Inc. Valuation – October 2015 Update $GOOG $GOOGL
Intuit Inc. Analysis – October 2015 Update $INTU
Oracle Corporation Analysis – October 2015 Update $ORCL
CA Inc. Analysis – August 2015 Update $CA
The Best Companies of the Software Industry – August 2015


The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.