Intuit Inc (INTU) DCF Valuation: Is The Stock Undervalued?

Johnny HopkinsStock ScreenerLeave a Comment

As part of a new series, each week we typically conduct a DCF on one of the companies in our screens. This week we thought we’d take a look at one of the stocks that is not currently in our screens, Intuit Inc (INTU).

Profile

Intuit is a provider of small-business accounting software (QuickBooks), personal tax solutions (TurboTax), and professional tax offerings (Lacerte). Founded in the mid-1980s, Intuit controls the majority of US market share for small-business accounting and do-it-yourself tax-filing software.

Recent Performance

Over the past twelve months the share price is up 27.41%.

Source: Google Finance

Inputs

  • Discount Rate: 9%
  • Terminal Growth Rate: 4%
  • WACC: 9%

Forecasted Free Cash Flows (FCFs)

Year FCF (billions) PV(billions)
2025 6.01 5.51
2026 7.27 6.12
2027 8.8 6.80
2028 10.64 7.54
2029 12.87 8.36

Terminal Value

Terminal Value = FCF * (1 + g) / (r – g) = 267.70 billion

Present Value of Terminal Value

PV of Terminal Value = Terminal Value / (1 + WACC)^5 = 173.98 billion

Present Value of Free Cash Flows

Present Value of FCFs = ∑ (FCF / (1 + r)^n) = 34.33 billion

Enterprise Value

Enterprise Value = Present Value of FCFs + Present Value of Terminal Value = 208.31 billion

Net Debt

Net Debt = Total Debt – Total Cash = 1.82 billion

Equity Value

Equity Value = Enterprise Value – Net Debt = 206.49 billion

Per-Share DCF Value

Per-Share DCF Value = Enterprise Value / Number of Shares Outstanding = $737.48

Conclusion

DCF Value Current Price Margin of Safety
$737.48 $621.11 15.78%

Based on the DCF valuation, the stock is undervalued. The DCF value of $737.48 share is higher than the current market price of $621.11. The Margin of Safety is 15.78%.

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