Is This Fintech Stock a Buy Before Its Q1 Earnings Release?

Intuit (INTU) is a leading financial software company that has built a reputation for facilitating financial management tasks. Its clients range from individual taxpayers to small businesses to self-employed entrepreneurs. Its portfolio of solutions includes TurboTax, QuickBooks, Credit Karma, and Mailchimp.

With the incorporation of artificial intelligence (AI) into all of its products, Intuit has experienced explosive growth. Furthermore, because of AI, cross-selling opportunities are increasing across its segments, presenting enormous growth potential. INTU stock has gained 8.3% year-to-date, compared to the S&P 500 Index's ($SPX)23.4% gain.

The company plans to report its first quarter fiscal 2025 results on Nov. 21, after the market closes. Let's look at how INTU performed in fiscal 2024, what analysts anticipate for this quarter, and whether the stock is a buy right now. 

Intuit’s Fiscal 2024 Ended on a High Note

Intuit stock has risen dramatically in the last 10 years, reflecting the company's ability to capitalize on the growing demand for digital financial solutions. The stock has returned 632.8% over the past decade.

In fiscal 2024, Intuit's revenue increased 13% year-on-year to $16.3 billion. The company operates in three segments, with Small Business and Self-Employed reporting the highest revenue growth of 19%. 

In this segment, QuickBooks Online accounting revenue increased by 17% during the year. Furthermore, online services revenue increased by 21%, driven by “increases in payments, payroll, capital, and Mailchimp,” according to management.

The small business ecosystem remains a key growth driver. QuickBooks, in particular, has seen strong adoption, with Intuit expanding its ecosystem to include payment processing, payroll, and other business management tools. 

Revenue for the other two segments, Consumer and Credit Karma, increased by 7% and 5%, respectively. 

While Intuit currently dominates the U.S. market, international expansion represents a significant growth opportunity. The company has invested in customizing its solutions to meet the needs of global customers. This is reflected in the 13% increase in international online revenue for fiscal 2024. Adjusted earnings per share (EPS) increased 18% to $16.94. 

At the end of the quarter, the company had $4.1 billion in cash and investments, as well as $6 billion in debt. Despite the debt, Intuit's consistent earnings growth has enabled it to return capital to shareholders. The company repurchased $2 billion in shares in fiscal 2024. 

In the fourth quarter, it announced a 16% quarterly dividend increase to $1.04 per share. INTU's yield of 0.63%, compared to the tech sector's average yield of 1.3%, is not particularly appealing. However, its aggressive dividend hikes may appeal to income-seeking investors. It has increased its dividends over the last 12 years. 

Furthermore, its forward dividend payout ratio of 21.5% is low, implying that dividend payments are currently sustainable and have room for growth. 

Will Fiscal 2025 Be Another Strong Year?

AI has been a boon to most industries. TurboTax now provides personalized tax advice thanks to AI integration, whereas QuickBooks assists businesses in automating bookkeeping and forecasting tasks.

Intuit's diverse product portfolio enables it to cross-sell its offerings. For example, a QuickBooks user may benefit from Mailchimp for marketing and Credit Karma for financial insights. 

For the first quarter of fiscal 2025, Intuit anticipates 5% to 6% revenue growth, driven by average growth in the Small Business and Self-Employed Group. Adjusted earnings per share, on the other hand, could fall from $2.47 to between $2.33 and $2.38. Analysts' estimates for the quarter are in line with management's projections. 

However, the company expects strong growth in fiscal year 2025. Revenue could grow by 12% to 13%, followed by a 13% to 14% increase in earnings.

In fiscal 2025, analysts predict a 12.1% increase in revenue to $18.2 billion, followed by a 14.1% increase in earnings. Revenue and earnings are expected to increase 12.3% and 15%, respectively, in fiscal 2026. Intuit stock is expensive, trading at 35 times projected earnings for fiscal year 2025.

What Does Wall Street Say About INTU Stock?

Overall, Intuit stock is rated a "strong buy" on Wall Street. Many analysts are optimistic ahead of the earnings release, and have reiterated their “buy” ratings on the stock. Citi analyst Steve Enders maintained a "buy" rating and price target of $760, citing the strong performance of the SMB segment and rising cross-selling opportunities in the mid-market segment. Barclays maintained a “buy” as well, setting a target price of $800.

Out of the 27 analysts who cover INTU stock, 21 have given it a "strong buy," while one has a “moderate buy” rating, and five rate it a “hold.” Based on the mean target price of $727.96, INTU stock has an upside potential of 7.5% from current levels.

Plus, the high target price of $795 suggests that the stock could rise 17.4% over the next 12 months.

Is INTU Stock a Buy Now?

No doubt, Intuit is a high-quality stock with a proven track record of innovation and growth. Like most analysts, I am optimistic about Intuit's future, due to its strong brand, diverse product offerings, and expansion into adjacent markets. The company is expected to benefit from the ongoing digital transformation of financial services and the growing reliance on AI-driven solutions. Despite its overvaluation, the company remains a good long-term buy-and-hold stock.