Is Intuit A Good Stock to Buy?

Intuit’s closest peer is H&R Block, Inc. (NYSE:HRB), with the caveat that H&R Block is more focused on professional face-to-face tax preparation while Intuit’s tax offerings are based on software for customers to complete their taxes themselves (of course, Intuit has considerable enterprise software products as well). H&R Block trades at a discount to Intuit, with a trailing P/E of 15, and also offers a dividend yield of over 4%. At first glance it might look like a better value, but we can see there being growth advantages to the software product. Analyst expectations are for earnings per share to grow 19% in its fiscal quarter ending in April- the company’s fiscal year is identical to Intuit’s- so they actually see more near term growth at H&R Block. If that’s the case, H&R Block would be a better buy but we think we’d need to research the two further before drawing any conclusions.

We can also compare Intuit to software providers SAP AG (NYSE:SAP), Adobe Systems Incorporated (NASDAQ:ADBE), and salesforce.com, inc. (NYSE:CRM). Intuit is actually at the lower end of the valuation range of this peer group: Adobe trades at 23 times trailing earnings, while SAP’s multiple is 25 and salesforce.com’s is more than 100. Growth expectations are low at the first two of these companies, and so even their forward multiples are greater than 20; while salesforce.com reported 35% revenue growth in its most recent quarter compared to the same period in the previous year, it trades very high compared to consensus earnings for next year. It’s quite possible that Intuit is the best buy of these four, as it at least has the sell-side forecasting moderate growth in the current fiscal year.