Is Intuit Too Cheap To Ignore?

Added: 2026-05-30

[00:00:00]Is Intuit stock too cheap to ignore? In this video I want to talk about this company that is getting some hate at the moment. The stock is down a 60% as you can see from this horrible stock chart. You have super investors sitting out of Intuit and maybe this is the rebound. Maybe it's getting too cheap to ignore and maybe it's a good time to buy.

[00:00:25]I can spoil you right away. I don't like Intuit, okay? I don't plan to invest in Intuit and I will show you why in this video. Intuit is a stock that people love on the internet. So people like the story, love the story, or some people don't like it at all. And I'm part of the second camp that don't like this I don't like the story at all and I will explain my point in this video. So it's very clear for everybody. Okay? In case this is your first video from this channel, welcome. My name is Kristou Nour. I'm French. I've been investing in the stock market for almost a decade now and I have achieved a performance of 25% per year. And I am investing in software companies that are down a lot like Adobe. So I understand why people become emotional because these stocks are down.

[00:01:12]It can get some it can get painful to invest in a stock because the story is fine but the stock is getting down and down and down. So I understand the worry people have for Intuit.

[00:01:25]But as a long-term investor, I always look at the fundamentals, whether things are re-accelerating or decelerating, whether margins are going up or margins are going down. I want to know if the management is buying the deep, doing smart buybacks, or diluting shareholders, or doing good acquisitions, or stupid acquisitions.

[00:01:45]And what I don't like about Intuit is the capital allocation and the priorities from the management.

[00:01:53]First, I want to show you big picture Intuit. What is Intuit? Let me do a quick recap. Let me read the introduction, the description. It's an accounting software. They have a TurboTax and they they have a two two three four big brands and they made some acquisitions, okay? It's an accounting software. They have QuickBooks and they have also Mailchimp. The company operates a retail tax filing tool TurboTax, personal finance platform Credit Karma and a suite of professional tax offerings for accountants. So, four big brands and if you look at the fundamentals, they look pretty good.

[00:02:31]The margins are high, gross margins at 80% net margins of 20% for a software company, that's pretty good, okay? And then you scroll down, you look at the revenue up and to the right, so wonderful. Net income up and to the right, wonderful. Free cash flow up and to the right, wonderful. And they don't have a massive debt problem. Every year they generate $6 billion of free cash flow, $4 billion of net income and they have $6 billion of cash of debt and they have a lot of cash. So, debt is not a problem, okay? They are fine, they will survive, they will not go bankrupt.

[00:03:12]This is not my problem I have with Intuit.

[00:03:15]The problem I have with the Intuit is the dilution.

[00:03:19]They have built their track record based on dilution and acquisitions and diversification.

[00:03:26]Now, I want to go into the website called Fiscal Year I will go to investor relations, slides and investor meeting.

[00:03:39]All the Intuit shareholders or wannabe shareholders have to understand what is the vision from the management team.

[00:03:49]What are your priorities as the CEO of the company, what is your vision for the next 5 years? If you're the CEO of Intuit, what do you want?

[00:03:59]To grow in this AI world?

[00:04:01]Do you want to become a capital light?

[00:04:04]Do you want to grow your margins? What is your goal?

[00:04:07]Okay?

[00:04:08]And every time I'm doing an analysis of a company, I spot what are the incentives of the management team and what are the objectives.

[00:04:18]If everything is consistent, everything is coherent, and I like what I see.

[00:04:25]We analyzed inside my coaching program, we analyzed Intuit, and we spotted some red flags.

[00:04:31]Okay?

[00:04:33]Because if you go through this annual general meeting, so from January 2026, let me pull full screen, you will see many slides about how Intuit is uh uh well positioned to benefit in this era of artificial intelligence. And you will see plenty of charts um talking about growth.

[00:04:57]>> [snorts] >> In 2014, they were growing revenue 8% and then 2019, the revenue was growing 13% and now in 2025, they were growing revenue about 16%. They think it will continue, right? Then they talk about their guidance, their margins. They don't mention their their guidance for revenue, sorry. They never mention the margins that are not adjusted.

[00:05:21]They only talk about non-GAAP, so adjusted margins, adjusted profitability. They talk mostly about growth, okay? They talk about the opportunities, the total addressable market, the penetration, the opportunities. They will put AI everywhere, the products, the road map, the goal. What are your goals? So this was my question my question. What is the vision from the management team? What are their goal for the next 5 years, 2030? So, first you see prosperity.

[00:05:53]We want savings rate, improve business success, 20 per Okay, fair enough.

[00:05:57]Reputation, best in class, most trusted company.

[00:06:02]Well, it's a subjective objective, if you if you ask me. And three, growth.

[00:06:09]Accelerate revenue growth to 20%. And I don't like this.

[00:06:15]You have three key objectives.

[00:06:18]The most important being growth needs [snorts] to reaccelerate. The goal of the company is to grow massively. They never talk about margins.

[00:06:27]They never talk about per share metrics like earnings per share, free cash flow per share. They never talk about the shareholder returns. They never talk about shareholders.

[00:06:36]And this is where I don't like the investment pitch, this investment thesis.

[00:06:42]Okay? Some people may like it.

[00:06:44]And they invest for growth. Look at Mercado Libre. They talk about growth, growth, growth, and it works, and it's lovely, and shareholders have been rewarded by a huge amount. But for me, personally, I don't like Intuit. They talk about growth, and they never talk about efficiency, shareholders.

[00:07:00]And what's next?

[00:07:03]Opportunities, acceleration, AI AI acceleration, mega platform for customers, AI use.

[00:07:12]Again, again, there was not one slide about efficiency.

[00:07:18]There was not one slide about margins.

[00:07:21]There was not one slide about the shareholders. So, maybe they don't care about the shareholders.

[00:07:27]Not they don't care, but that that's not their priority.

[00:07:31]And I want to only invest in companies that love the shareholders. They're doing smart buybacks, and they won't dilute you.

[00:07:39]I already talked about this problem before.

[00:07:42]For Intuit, you have a dilution problem.

[00:07:45]You can go to financials on Fiscal Year I. You click this toggle, percentage change. You scroll down, you scroll down, you look at the diluted weighted average shares outstanding.

[00:07:56]Okay?

[00:07:57]You will see this chart.

[00:08:01]The company was doing buybacks in the past.

[00:08:04]Buybacks, buybacks. The number was negative, so you reduce the amount of shares. And then after 2016, something happened and they diluted shareholders.

[00:08:17]Okay.

[00:08:18]Remember this, that's important. And in case you want to do your exercise yourself, you can click on the description to use Fiscal Year I for free for 2 weeks. You have a trial period and then it gets cheaper. Fiscal Year I is maybe the best investing platform. I'm using this several hours per day. Go on the description, click on my link, create an account. It's completely free for 2 weeks. Okay?

[00:08:40]So, the shares were going down because of buybacks inefficiency. And then something changed. Hmm, that's funny. If you are a proper shareholder, you should know this. You should know what happened.

[00:08:52]Well, let's see. Let's see.

[00:08:54]Let's see another line, right? They talk about growth. Let's see the growth. By the way, if you want to become a better investor and improve your performance, I have a coaching program. It gives you the exact method I've used to generate 25% per year for almost a decade. More on that at the end of the video.

[00:09:12]Let's see the growth of the company.

[00:09:15]Total revenue, as you can see here in purple.

[00:09:19]On an annual basis, what do we have? For the past 20 years, revenue has been what? 15% per year. And then after the great financial crisis, the revenue was growing 3% per year, 10% per year, flat, 10% per year, 10% per year.

[00:09:37]So, for what, 10 years, the revenue growth rate was never above 10%.

[00:09:43]Or struggling to become 10%.

[00:09:46]How can you grow?

[00:09:48]How can you grow? If your promise, if your goal is to grow 20% per year, how can you grow?

[00:09:55]Either you grow organically and you have investment opportunities, new clients to the total addressable market, or you absorb companies.

[00:10:05]You make acquisitions. So, you absorb their revenue and you grow. Well, maybe this is what happened for Intuit.

[00:10:13]If you are a Intuit shareholder, you should know this. By the way, this video acts as an exercise for you to make sure you have done the work before buying the dip. Okay? If you are Intuit shareholder and you don't know this, uh maybe that's a red flag for you. So, be careful, okay? I'm making this video to spot the warning flags, warning signals for you because there are some signs that don't look great for the future of Intuit. Because now I'm talking about the past, but later I will talk about the future of Intuit.

[00:10:45]So, if your objective is growth, growth, growth, growth, growth, how can you grow?

[00:10:49]You can see that they grew 25% in 2021 and 30% in 2022.

[00:10:58]So, it's great.

[00:10:59]They reached their goals.

[00:11:02]But what happened during these years?

[00:11:04]What happened is massive acquisition.

[00:11:08]Very simple.

[00:11:10]If you can check the the balance sheet here, you should have a goodwill line.

[00:11:15]Goodwill.

[00:11:16]Goodwill is the surplus you pay based on an acquisition. You see almost zero goodwill, zero acquisition, zero, zero, zero, zero, zero.

[00:11:24]And if they don't reach their goal of growing a lot organically, the management has clear incentives to grow at all cost. So, they made a massive acquisition in 2021. So, massive goodwill, boom, big jump. And then, another one, massive acquisition in 2022, boom, massive goodwill.

[00:11:43]And then, you have no big jump, so no good no more goodwill, so no more acquisitions, and guess what?

[00:11:50]The growth declined again, back to 12 15%.

[00:11:55]So, the only time in history Intuit grew 20% was because of massive acquisitions.

[00:12:07]And now, they're telling us they expect a growth rate of 20%. They have a 2030 goal as for the next 5 years I want to grow again.

[00:12:16]So, if they cannot grow organically 20% per year, it's quite likely they will make an acquisition in the future.

[00:12:25]Now that you know this, you can check what has been the track record of their acquisitions in the past. Were they good acquisitions or not good acquisitions?

[00:12:34]Well, you can check. How are they uh financed?

[00:12:39]As I told you before, they diluted shareholders to fund these acquisitions. I can show you revenue went up a lot, but the number of shares went up, okay?

[00:12:51]Shares Even on a quarterly basis, it will be uh better for you. You have a lot of charts at the same time.

[00:12:58]Woah, it's a mess.

[00:12:59]Uh How can I show you this?

[00:13:03]It is a mess. I'm aware it's a mess. I'm working on this.

[00:13:08]This is the number of shares that went up in orange, and as a percentage, look at this.

[00:13:15]Goodwill Okay, so now you see goodwill going up, and instead of doing buybacks like they did in the past, they diluted shareholders by 5%. You add 5% more shares. So, the earnings per share is mathematically going down. You are diluting your shareholders. Your shareholders are getting diluted. Then again, another one, 5%.

[00:13:36]And uh it's the exact moment revenue went up.

[00:13:41]You kind of spot the correlation here.

[00:13:44]This blue line of 5% goes up, revenue goes up. Just a quiet growth.

[00:13:50]And by the way, I clicked on um I clicked on quarterly. You can see the revenue on a quarterly basis.

[00:13:59]After the acquisition, the revenue was growing roughly 10% per year. They reached 20% and then went back down. And the last quarter, they did 10% growth rate in revenue.

[00:14:10]They have a guidance of what? 13 to 14?

[00:14:13]Yeah, it's in this range.

[00:14:15]But their goal is not 13 14. Their goal is to grow revenue by 20% per year.

[00:14:20]So, it's quite likely they make another acquisition.

[00:14:24]About the acquisition, first form of uh payment, they paid with dilution of their shareholders.

[00:14:33]So, all their efforts with buybacks, boom, vanished.

[00:14:36]The second form of payment for these acquisitions was debt.

[00:14:42]You can see here massive goodwill.

[00:14:46]You can see here. The goodwill is in green, the debt is in red. You can see that they used more debt to do more goodwill. So, more debt for the acquisition and then round two, more goodwill, so the second acquisition with more debt.

[00:15:01]And now they have to they slowly repay their debt, slowly but surely. But before, they have almost no debt. So, they were capital light, growing roughly 10% per year.

[00:15:13]Diluting their shareholders, doing buybacks, life was good, and they decided to change. Why?

[00:15:19]I don't know.

[00:15:21]Because of ego from the management team, because of a clear disruption, why did they change their business model of being asset light and doing buybacks to now doing big acquisitions, diluting shareholders, and having more debt?

[00:15:37]They want to grow.

[00:15:39]Maybe they have incentives.

[00:15:41]And the management team will have huge bonuses if they grow revenue. Okay?

[00:15:47]Something you can check is I mean I can do some and give you some homework.

[00:15:51]Check what are the incentives. How is the management getting paid? On the proxy success statement, you should have this.

[00:15:58]If the management is getting paid based on the revenue growth, if the management team will get a huge bonus if you grow 20% growth rate, then there is a clear incentive for them to grow revenue.

[00:16:12]And if they cannot grow revenue revenue organically, as you can see here, revenue is declining to 10%. They are are forced to make an acquisition in the future. They are forced to take on more debt. They are forced to dilute you the shareholder. So, the management team is not acting based on your best interests as a shareholder.

[00:16:36]They are acting based on their bonus.

[00:16:40]And I don't like this.

[00:16:41]They have a mission to grow a lot.

[00:16:44]And the only way they can grow 20% per year, in my opinion, is by doing a massive acquisition with a lot of debt and a lot of dilution. And I don't like this.

[00:16:53]Why? Because in the past, it was a business that was pretty good. They had a few brands. They did not have four segments.

[00:17:03]And the margins were fine.

[00:17:05]Gross margins, uh can show you this.

[00:17:10]Operating margins, it was a fine business software business with very nice margins. Okay? Life is good, gross margins of 80% and operating margins that were growing from 15% to 20% to 30%.

[00:17:29]And you see the impact of big acquisitions over time, you completely stop the growth in efficiency.

[00:17:36]Another chart I can show you talking about efficiency is the return on invested capital, the ROIC.

[00:17:45]Capital efficiency.

[00:17:47]I mean, you use this scale right for this. It's the best.

[00:17:51]In the past, the ROIC, the return on invested capital, was very efficient.

[00:17:57]20%, 30%, the higher the better.

[00:18:00]40%, 50%. And when you make your big acquisition, boom, you decline from 50 to 20 to 10.

[00:18:09]Has it recovered? No.

[00:18:12]So, the company has gotten a little bit less efficient since the acquisitions.

[00:18:17]Why?

[00:18:19]Most probably, they overpaid.

[00:18:21]They overpaid for their big acquisitions and it was not a great solution.

[00:18:28]Another word we have for Intuit is they diversified over time.

[00:18:35]Okay? So, maybe they overpaid. You can look at all the metrics, return on capital employed, you will have the same trend. You can look at any metric, it will show you the same conclusion.

[00:18:47]Before, the company was increasingly efficient and since the acquisitions, less efficient.

[00:18:55]And the only opportunity for them to grow 20% is to continue to make these big acquisitions. And that I don't like.

[00:19:05]So, maybe I should have named the video I don't like Intuit instead of is Intuit too cheap to ignore because I am I am highlighting all the bad points. I'm very much aware of this.

[00:19:21]Now, let me talk about what is good. I mean, you will still have a clear AI beneficiary. They will put AI everywhere. It will become more efficient and the moat of Intuit is the trust, right?

[00:19:35]Reliability.

[00:19:36]You give Intuit all your information and they will help you in the process. It's efficiency, ease of use. So, life is good. In terms of products, services, I have nothing bad to say about Intuit.

[00:19:51]I'm not a US citizen, but I have some US citizens as a clients and they know how it works. I have some friends, they know. So, in terms of quality of products, quality of services, road map, I have no doubt.

[00:20:06]Okay? The moat is here. It's fine. AI will not help you make your own taxes if you have a complex tax filing. Okay?

[00:20:17]So, they will help you in AI I don't think AI will completely kill the business. I think this is not their main worry. The main worry I have is what I just told you.

[00:20:28]Their goal will be achieved if they dilute you the shareholder.

[00:20:32]And it seems like there is a a great legendary investor, uh Dev Kantesaria, that has the same conclusion. You can see this great investor on Dataroma.

[00:20:47]He has a fund called Valley Forge Capital Management. So, it's a quality long-term investor and he's a big shareholder in Intuit.

[00:20:58]Big investor in Intuit. He has been investing in Intuit. You can see here since 2019. It was 6% of his portfolio.

[00:21:09]And he just held and held and held. And now, for the past few quarters, he exited the position.

[00:21:18]It seems like Intuit made massive acquisitions.

[00:21:21]Maybe they diversified their business model with Mailchimp.

[00:21:25]Okay, fair enough. Um and they moved away from their core assets.

[00:21:32]And for the past few quarters, David Gottesman, great legendary quality investor, is selling. This quarter, he trimmed Intuit. One quarter ago, uh he trimmed Intuit. He trimmed again.

[00:21:47]He trimmed again. He reduced the position. So, some quality investors are moving away from Intuit.

[00:21:54]I don't know why. They are not sharing in interviews their reasons, but maybe this is why.

[00:22:01]Maybe this is why uh people are moving away from Intuit. They promised growth, and organically, it will be very hard to reach this growth rate.

[00:22:13]So, the only way they reach their goal is by diluting you the shareholder and taking on more debt. So, you have a you don't have a How do you say it?

[00:22:27]An alignment of interests from the management team and you.

[00:22:31]You want the management team to work for you. Buybacks, you want them to be big shareholders, so you are in the same arena, same battle. And now you have a dissociation.

[00:22:43]So, it's not good for long-term shareholders. They don't work for you.

[00:22:46]They work for them.

[00:22:48]Okay? And instead of ownership, what do we have? Do we have like a big insider ownership?

[00:22:54]The founder is still here. He owns 2% and the CEO owns 0.005% of the shares. So, lack of incentives here. You don't have a big massive insider ownership.

[00:23:09]Yes, the founder is still here, but he's no longer the CEO.

[00:23:13]Mhm, and I don't see anything here.

[00:23:16]Maybe here, yeah, that's 2%. So, you don't have a massive insider ownership, which means they are salary men, which means they love their bonus. So, if there is a huge bonus to grow revenue at 20% per year, they will dilute you.

[00:23:33]So, it's a looming threat. It will come, but it's in front of your face. It will come one day or another. If they cannot grow organically 20%, they will dilute They are forced to dilute you, take on more debt, so you will have one headline one day or another, this year, next year, into it announces a big acquisition of this company. And then suddenly they will grow 20% by magic.

[00:23:58]And then the CEO will buy a new house by magic. That's at your expense. I don't want to be part of this relationship at all. So, I I am I have no interest to answer the question, is Intuit cheap to ignore? It depends on you, but for me, absolutely no. I don't want to touch it regardless of the price. Speaking of price, speaking of value, let's look at the P/E ratio.

[00:24:21]I will not talk about the free cash flow because you have a massive SBC.

[00:24:25]Uh so, I will look at the P/E ratio.

[00:24:28]You have a P/E ratio at is at 19 at the moment. It was very high. It was at 60 a few months ago, a few quarters ago.

[00:24:36]It's crazy. The company was extremely expensive back in the days. I don't know what people thought.

[00:24:42]I don't know. Frankly, I don't know.

[00:24:45]But, the company was extremely expensive with a P/E ratio of 60. Now, the stock is down massively. I mean, it's down by how much? Down 61% below highs.

[00:24:58]And still you have a P/E ratio of 20.

[00:25:02]The forward P/E ratio here is 11.

[00:25:07]And I have a question. Maybe somebody from the audience can answer my question. I still did not find a good answer.

[00:25:15]How is the forward P/E ratio calculated?

[00:25:19]You take the price of right now and you compare the earnings of next year.

[00:25:24]Now you have a big gap between the blue.

[00:25:28]Look at this.

[00:25:29]Between the blue and the orange. The P/E ratio is 19 and the forward P/E ratio is 11 is 12.

[00:25:37]So, that assumes a lot of growth, right?

[00:25:40]And if you look at click at estimates on Fiscal Year I earnings per share growth rate analysts on Wall Street think that the business will grow earnings per share at 18% in 2026 and at 14% in 2027.

[00:25:58]So, it's not a massive growth.

[00:26:01]Now, I told you the P/E ratio is 19.

[00:26:05]Even if you are bullish you are more optimistic than 18%. If you think earnings per share are going to grow 20% you can calculate the real forward P/E ratio.

[00:26:18]You go to 19.21 divided by 1.20 that's 16.

[00:26:27]So I don't know why this orange line is at 11.

[00:26:33]For from my calcula- calculation it is at 16. So, be careful.

[00:26:39]Fiscal Year I is a wonderful website, maybe the best, but sometimes you have some strange things happening.

[00:26:46]If somebody has the answer, please let me know in the comments.

[00:26:50]I don't have a clear answer for this, but I think the orange line should be higher. So, you have a business that will dilute you in the future.

[00:26:59]Still good, still growing minimum 10% per year, but they will dilute you in the future, so no buybacks. At the forward P ratio of 16.

[00:27:07]I think in the SaaS apocalypse, in the software stocks department, I can find better deals without this dilution risk.

[00:27:16]You can have other companies that are growing in the same range, 10 15%, and are doing massive buybacks. Adobe, for example, growing 10 12% per year, but buybacks of 6% per year, and no plans of acquisitions for Adobe, no plans of big dilution from Adobe. Okay? Their focus at the moment is buybacks buybacks buybacks.

[00:27:39]So, okay, fair enough.

[00:27:42]Valuation is not as cheap as people think. Something on the websites, if you check on GuruFocus, you have a forward P ratio of 11. I just don't understand how is this forward P ratio 11?

[00:27:56]What is the formula?

[00:27:58]Maybe I'm missing something, but now I've given you some I've given you some homework. You know what to do. So, to answer the question, is Intuit too cheap to ignore? Do I think Intuit is too cheap to ignore?

[00:28:10]What do I think about Intuit?

[00:28:11]I don't like it. And I don't plan to invest in Intuit. I hope that was helpful for you as a shareholder or a potential shareholder.

[00:28:20]And if you are an actual shareholder, you have some homework to check now.

[00:28:23]Okay? So, good luck to everybody, and I'll see you tomorrow for another video.

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