Investors Await Intuit's Key Quarter (INTU)

Intuit Inc. (NASDAQ: INTU) reports earnings after the close of trading today.  The tax and business software provider is expected to post $1.33 EPS on $1.29 Billion in revenues.  As this is the quarter that had all the Turbo Tax revenues, this is the quarter of importance similar to Christmas for retailers.

First Call has estimates for this next quarter, a total throw away quarter, at -$0.04 EPS on $471.68 million in revenues.  That will also be the fiscal year-end.  If the company offers any long-term guidance, First Call has estimates for fiscal July-2009 at $$1.80 EPS and $3.3 Billion in revenues (up 13% on EPS and up 9% on revenues from 2008 to 2009).

While Intuit has been trying diversify itself away from being a tax software company into a personal finance and business software company, the company hasn’t really performed that well over the last two and a half years.  With shares basically flat at $27.45, shares are only about 10% off the 52-week lows; its 52-week trading range is $25.08 to $33.10.  In late 2006 shares were briefly as high as $35.00.

While it isn’t as widely followed as one might expect, the analysts that cover Intuit have an average target price of $35.00.  Over the last 60 days, Credit Suisse started coverage with an Outperform rating.

It is obvious that Wall Street isn’t expecting much from today’s numbers.  As far as valuations go and as long as the company hits its targets for fiscal July-2008, the company trades with a current year implied P/E ratio of 17.26 and trades at 3-times revenues.  As long as no serious threats arise to its dominance in tax software and as long as the company can keep making strategic  acquisitions that fit within its business plan then shares are marginally cheap by most metrics and fairly valued according to other metrics.

Jon C. Ogg
May 20, 2008