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Intuit (INTU) is a leading name in the fintech industry. It is the driving force behind a diverse range of products, including TurboTax, Credit Karma, QuickBooks, and Mailchimp, which serve both individual consumers and small- to medium-sized businesses. In recent years, Intuit has capitalized on the growing demand for digital financial solutions.
The company has improved the effectiveness of its products by utilizing artificial intelligence (AI), which also allows for cross-selling across segments. Its AI-powered features, such as predictive analytics and automated workflows, are changing the way small businesses handle finances. This resulted in a strong start to fiscal 2025, exceeding both consensus revenue and earnings estimates in the first quarter.
INTU stock has gained 3% year-to-date, compared to the S&P 500 Index's ($SPX) 24.1% gain. Wall Street predicts the stock can rally more over the next 12 months.
A Strong Start to Fiscal 2025
Intuit started fiscal 2025 with solid results, reporting 10% year-over-year revenue growth, reaching $3.3 billion for the first quarter.
The company operates in three segments. Revenue for the Global Business Solutions Group increased by 9% year on year to $2.5 billion. Within this segment, Online Ecosystem revenue increased by 20% to $1.9 billion, owing to strong demand for QuickBooks Online (QBO) and complementary services such as Payroll, Mailchimp, and Money.
The Credit Karma segment experienced a remarkable 29% growth in Q1, owing to strong performance in personal loans, auto insurance, and credit cards. Intuit intends to further integrate Credit Karma with other products such as TurboTax to create a unified, year-round financial platform for consumers.
Adjusted diluted earnings increased modestly to $2.50 from $2.47 in the prior-year quarter, highlighting the company's underlying strength despite short-term challenges.
Intuit's Desktop Ecosystem saw a 17% revenue decline in Q1, which is part of the expected transition to a subscription-based model. As the company transitions its desktop offerings to a recurring subscription model with more frequent updates, it anticipates a return to growth in the second quarter. This transition is expected to boost long-term growth by stabilizing revenue streams and decreasing reliance on one-time product sales. Plus, Intuit continues to make strategic investments to expand both domestically and internationally.
Intuit's strong cash flow allows it to prioritize shareholder value while investing for future growth. At the end of the quarter, the total cash and investment balance stood at $3.4 billion. Its debt-to-equity ratio is also low at 0.31x.
Intuit is also a dividend stock. While its 0.65% forward yield is not particularly attractive, its aggressive dividend increases may appeal to income-oriented investors. The company increased its quarterly dividend by 16% to $1.04 per share in the previous quarter. It has consistently increased its dividends over the past 12 years. Furthermore, a forward payout ratio of 21.6% is currently sustainable, allowing for significant dividend growth.
Looking ahead, the company anticipates total revenue growth of 12% to 13% in fiscal 2025, with adjusted earnings rising by 13% to 14%. For the full fiscal year, analysts predict a 12.2% increase in revenue to $18.3 billion, followed by a 13.9% increase in earnings. Revenue and earnings are expected to increase 12.3% and 14.5%, respectively, in fiscal 2026. Intuit stock is trading at a discount to its five-year price-earnings average.
What Does Wall Street Say About INTU Stock?
Overall, Intuit stock is a “Strong Buy” on Wall Street. Out of the 28 analysts who cover INTU stock, 21 have given it a "Strong Buy," while one has a “Moderate Buy” rating, and six rate it a “Hold.” Based on the mean target price of $735.20, INTU stock has an upside potential of 14.5% from current levels. Plus, the high target price of $800 suggests that the stock could rise 24% over the next 12 months.
Intuit’s performance in Q1 fiscal 2025 highlights its strong market position and long-term growth potential in the fintech industry. With a diverse portfolio, strong financials, AI-driven platforms, and a continued focus on international and mid-market expansion, the company is well-positioned for long-term success. However, as a growth stock, Intuit carries risks and may be appropriate for investors with a high-risk appetite and a longer investment horizon.
