INTU - Embedded Expectations Analysis - 2020 05 01
Intuit Inc. (INTU:USA) currently trades near historical highs relative to UAFRS-based (Uniform) earnings, with a 35.6x Uniform P/E, implying bullish expectations for the firm. Furthermore, management is confident about their tax refund and payroll offerings, personalized financial assistance, and Credit Karma acquisitionSpecifically, management is confident they are focused on helping customers get their largest tax refund, that they introduced a new payroll lineup featuring full-service offerings, and that understanding the difference and availability of lower-cost personal loans versus high-cost credit cards could save consumers $20bn-$40bn. In addition, they are confident a broad set of qualified customers would be provided access to the Credit Karma platform, that they see no one else in the marketplace pursuing a personalized financial assistant, and that their Credit Karma acquisition could benefit consumers. Moreover, they are also confident the strategy for Credit Karma is to create a consumer finance platform that can serve as a financial assistant for consumers, that their M&A principles to achieve greatness for end customers have not changed, and that they would get scale out of their operating cost bases as they move into new verticals
Intuit helps consumers, small businesses, and the self-employed prosper by delivering financial management and compliance products and services. The company also provides tax products to accounting personnels, who are main partners that help the company serves small business customers. The company organizes its businesses into three reportable segments: Small Business and Self-Employed, which provides QuickBooks financial management solutions to solve financial and compliance problems; Consumer, which includes TurboTax products and services to prepare and file income tax returns; and Strategic Partner, which includes professional tax offerings and serve professional accountants in United States and Canada.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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