Has Intuit Run Too Far?
Stocks: (INTU)(MSFT)(ADP)(HRB)
Shares in financial software company Intuit are up from under $40 early last year to $58, a twelve month high. The shares should have moved given the company's financial performance. In the quarter ending April 30, revenue hit $953 million and operating income was $480 million.
Revenue rose 14% from the same period a year ago.
The company does have some problems that could keep it from moving much higher. One is that it has been part of the options pricing scandal, which is yet to be resolved. Another is that guidance for the July quarter was for revenue to grow as little as 3% and for the fiscal year ending in July growth may be as low as 13% over the last fiscal year.
Another issue is that some of Intuit's brands are not growing quickly at all, bringing the overall rate of growth for the company down. Quicken Books grew at a rate of only 8% in the April quarter.
The most important issue is that Intuit, like many software companies, faces competition from Microsoft. Some of the new versions of Office offer accounting software for small businesses. Microsoft and ADP have developed a payroll solution for customers. H&R Block also has a horse in the race with its TaxCut product. All of these products could put pressure on margins at Intuit.
It is hard to make a case that Intuit's recent growth is anything other than impressive, but future increases may come more dearly, and the stock does trade at the top of its range.
Douglas A. McIntyre can be reached at douglasamcintyre@gmail.com. He does not own securities in any of the companies he writes about.
Shares in financial software company Intuit are up from under $40 early last year to $58, a twelve month high. The shares should have moved given the company's financial performance. In the quarter ending April 30, revenue hit $953 million and operating income was $480 million.
Revenue rose 14% from the same period a year ago.
The company does have some problems that could keep it from moving much higher. One is that it has been part of the options pricing scandal, which is yet to be resolved. Another is that guidance for the July quarter was for revenue to grow as little as 3% and for the fiscal year ending in July growth may be as low as 13% over the last fiscal year.
Another issue is that some of Intuit's brands are not growing quickly at all, bringing the overall rate of growth for the company down. Quicken Books grew at a rate of only 8% in the April quarter.
The most important issue is that Intuit, like many software companies, faces competition from Microsoft. Some of the new versions of Office offer accounting software for small businesses. Microsoft and ADP have developed a payroll solution for customers. H&R Block also has a horse in the race with its TaxCut product. All of these products could put pressure on margins at Intuit.
It is hard to make a case that Intuit's recent growth is anything other than impressive, but future increases may come more dearly, and the stock does trade at the top of its range.
Douglas A. McIntyre can be reached at douglasamcintyre@gmail.com. He does not own securities in any of the companies he writes about.
posted by douglas mcintyre at 7:28 AM
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