By Rob Otman
Intuit (Nasdaq: INTU) is a $32.85 billion company today. Investors that bought shares one year ago are sitting on a 22.31% total return. That’s above the S&P 500’s return of 17%.
Intuit stock is beating the market, and it reports quarterly earnings tonight. But does that make it a good buy today? To answer this question, we’ve turned to the Investment U Stock Grader. Our Research Team built this system to diagnose the financial health of a company.
Our system looks at six key metrics…
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✗ Earnings-per-Share (EPS) Growth: Intuit reported a recent EPS growth rate of -54.55%. That’s below the software industry average of 24.67%. That’s not a good sign. We like to see companies that have higher earnings growth.
✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the software industry is 71.5. And Intuit’s ratio comes in at 42.65. It’s trading at a better value than many of its competitors.
✗ Debt-to-Equity: The debt-to-equity ratio for Intuit stock is 146.5%. That’s above the software industry average of 60.65%. That’s not a good sign. Intuit’s debt levels should be lower.
✓ Free Cash Flow per Share Growth: Intuit’s FCF has been higher than that of its competitors over the last year. That’s good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It’s one of our most important fundamental factors.
✓ Profit Margins: The profit margin of Intuit comes in at 1.28% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Intuit’s profit margin is above the software average of -22%. So that’s a positive indicator for investors.
✓ Return on Equity: Return on equity gives us a look at the amount of net income returned to shareholders. The ROE for Intuit is 135.9%, and that’s above its industry average ROE of 12.4%.
Intuit stock passes four of our six key metrics today. That’s why our Investment U Stock Grader rates it as a Buy With Caution.
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth. For more details, click here. …read more
Source:: Investment You
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