Here’s How You Should Evaluate Intuit (INTU) Stock
FundsmithLondon-based investment management company,, published its 2022 annual update. You can find a copy of the 2022 annual update here. downloaded here. The Fundsmith Equity Fund saw a decline of -13.8% in 2022, compared to a 7.8% drop for the MSCI World Index sterling with dividends reinvested. The fund remains the sector’s best performer since November 2010, when it was launched. To see the top 5 holdings, click here.
Fundsmith highlighted stocks like Intuit Incorporated. (NASDAQ)INTUIn the 2022 annual investor letter, he will be addressing the following: Intuit Inc., NASDAQ:INTU, is a financial management company based in Mountain View, California. It provides services and products for individuals, small businesses and accountants. Intuit Inc.’s stock closed at $395.31 each share on January 11, 2023. Intuit Inc. (NASDAQ;INTU) shares lost 28.51% in the last 52 weeks. Their one-month return was -0.31%. Intuit Inc.’s market capitalization is $111.052billion (NASDAQ:INTU).
Fundsmith made the following comment on Intuit Inc., NASDAQ:INTU in its 2022 annual investor newsletter:
“Take the example of Microsoft and Intuit Inc. (NASDAQ:INTU). Microsoft shares are currently valued at a ratio of 25.0x the consensus EPS estimate to the fiscal year ending June 20,23. Intuit, however, is valued at 28.4x non-GAAP estimates for the fiscal year ending in July 2023. Analysts and investors may agree that Intuit trades at a higher multiple due to greater growth potential. Intuit does however remove share-based compensation from its non-GAAP earnings per share, while 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. Analysts and investors may consider a 14% premium for Intuit to Microsoft (25.0 times versus 28.4 times) 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 analysts and investors look more at cash flow metrics than accrual profit. Even if GAAP is followed, it’s possible for share-based compensation to cause cash flow distortions. GAAP allows share-based compensation to be added back into cash flow from operating activities. This cash flow is then used to calculate free cash flow. ..” (Click here to read the full text)
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Intuit Inc., NASDAQ:INTU is not on our list. 30 Most Popular Stocks Among Hedge Funds. Our database shows that 86 hedge fund portfolios owned Intuit Inc. (NASDAQ :INTU) at end of the third quarter. This compares to 75 holdings in the previous quarter.
Intuit Inc. (NASDAQ.INTU) was the topic of our discussion. another article and was part of the top 100 most valuable Silicon Valley companies worldwide. Also, check out our hedge fund investor letters Q4 2022 You can find more investor letters from leading investors and hedge funds on this page.
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Disclosure: None. This article was originally published at Insider Monkey.