1. Intuit Inc. (NASDAQ:INTU)
Soros Fund Management’s Stake Value: $33,061,125
Dividend Yield as of February 21: 0.79%
Intuit Inc. (NASDAQ:INTU) is a California-based business software company that mainly deals in financial software. The company currently pays a quarterly dividend of $0.78 per share and has a dividend yield of 0.79%, as of February 21. It has been rewarding shareholders with increased dividends for consecutive 10 years.
Soros Fund Management initiated its position in Intuit Inc. (NASDAQ:INTU) during the first quarter of 2013 with shares worth over $12 million. In the most recent quarter, the hedge fund owned an INTU stake worth over $33 million. The company represented 0.45% of billionaire George Soros’ portfolio.
At the end of Q4 2022, 92 hedge funds tracked by Insider Monkey reported owning stakes in Intuit Inc. (NASDAQ:INTU), up from 86 in the previous quarter. The collective value of these stakes is over $5.6 billion.
Fundsmith mentioned Intuit Inc. (NASDAQ:INTU) in its annual 2022 investor letter. Here is what the firm has to say:
“Take the example of Microsoft and Intuit Inc. (NASDAQ:INTU). Microsoft shares are currently being valued at a P/E ratio of 25.0 times the consensus EPS estimate for the fiscal year ending June 2023. Meanwhile, Intuit is being valued at 28.4 times the non-GAAP consensus estimate for the fiscal year ending July 2023. Many investors and analysts may accept that Intuit is trading at a higher multiple given expectations of greater growth potential. However, Intuit removes share-based compensation from their non-GAAP EPS whereas Microsoft does not. Given that Intuit’s GAAP EPS guidance for the year ending 31st July 2023 is $6.92–$7.22, its non-GAAP guidance is $13.59–$13.89, and the consensus estimate for 2023 EPS is at $13.69, it seems clear that most sell-side analysts are accepting the company’s non-GAAP adjustments, which includes the removal of some $1.8bn of share-based compensation, in their estimates. If we include the impact of share-based compensation in Intuit’s 2023 EPS to make a more apples-to-apples comparison with Microsoft based upon GAAP EPS, Intuit’s 2023 EPS would be closer to $9, meaning that the shares would be trading at a multiple of about 43 times. I think investors and analysts may find a premium of 14% for Intuit over Microsoft (28.4 times versus 25.0 times) to be reasonable. I’m not so sure they are fully aware that Intuit shares are actually trading at a premium of 73% if share-based compensation is treated in the same manner between the two companies.
Many investors and analysts, including us, look to cash flow metrics more than accrual profits. Unfortunately, share-based compensation may cause distortions in cash flow metrics as well, even when they follow GAAP. Under GAAP, share-based compensation is added back in the cash flow from operating activities, which in turn is used in the computation of free cash flow. ..” (Click here to read the full text)
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