Intuit has followed the market’s trajectory closely, rising in tandem with the S&P 500 over the past six months. The stock has climbed by 11.9% to $675.01 per share while the index has gained 16.8%.
Is INTU a buy right now? Find out in our full research report, it’s free.
Why Does INTU Stock Spark Debate?
Originally named after its founding product "Intuitive for the first-time user," Intuit (NASDAQ:INTU) provides financial management software and services including TurboTax, QuickBooks, Credit Karma, and Mailchimp to help consumers and small businesses manage their finances.
Two Things to Like:
1. Billings Growth Boosts Cash On Hand
Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.
Intuit’s billings punched in at $3.89 billion in Q2, and over the last four quarters, its year-on-year growth averaged 17.5%. This performance was solid, indicating robust customer demand. The cash collected from customers also enhances liquidity and provides a solid foundation for future investments and growth. 
2. Customer Acquisition Costs Are Recovered in Record Time
The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.
Intuit is extremely efficient at acquiring new customers, and its CAC payback period checked in at 12.3 months this quarter. The company’s rapid recovery of its customer acquisition costs indicates it has a highly differentiated product offering and a strong brand reputation due to its scale. These dynamics give Intuit more resources to pursue new product initiatives while maintaining the flexibility to increase its sales and marketing investments.
One Reason to be Careful:
Projected Revenue Growth Is Slim
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect Intuit’s revenue to rise by 12.4%, a slight deceleration versus its 19.7% annualized growth for the past five years. This projection doesn't excite us and implies its products and services will face some demand challenges. At least the company is tracking well in other measures of financial health.
Final Judgment
Intuit’s merits more than compensate for its flaws, but at $675.01 per share (or 9× forward price-to-sales), is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
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