With the arrival of a new year comes the flurry of activity that is tax season. For many investors, Intuit (NASDAQ:INTU) -- the parent company of QuickBooks, TurboTax, and Mint -- and its stock might come to mind. But this financial services company is more than just an investment play on tax season: Fintech is busting down old barriers between historically partitioned financial services, and Intuit looks poised to benefit -- although it may not be the most exciting stock in this space.

Empowering consumers and small businesses

Though many consumers and small businesses were dealt an incredibly difficult hand by the pandemic, Intuit was an integral part of helping many to bridge the troubled waters that were 2020. QuickBooks and TurboTax offer a myriad of tools to automate and simplify business and personal finance admin using AI. Mint and Turbo help millions of households manage their budgets, monitor their credit scores, and connect with the right financial products for their situations -- and the recent announcement that the company would purchase former rival Credit Karma will only build on Intuit's strength on this front. 

Two people pictured off screen working on a tablet and chart.

Image source: Getty Images.

In total, Intuit's diverse stable of software spans services worth hundreds of billions of dollars every year. And in the remote-work world that COVID-19 thrust all of us into, Intuit has a myriad of solutions to help. The company's revenue and adjusted operating profit grew 13% and 17%, respectively, in fiscal 2020 to $7.68 billion and $2.18 billion. And fiscal Q1 2021 (the three months ended Oct. 31, 2020) revenue and adjusted operating income increased 14% and 159% from a year ago, the latter metric getting a big boost as Intuit's bottom line rebounds off of low profitability in the last couple years as the software company has invested heavily to promote growth.

Given the rising importance of the digital realm, Intuit's aspirations to connect the world to financial advice should be a growth story for the foreseeable future. And with trailing 12-month revenue of $7.8 billion, this is still a relatively small company when compared to the massive financial services industry it operates in, which is worth over a trillion dollars in annual spending in the U.S. alone, according to the Federal Reserve Bank of St. Louis.

A "value" play in the fintech universe

Fintech stocks like Intuit are thus an exciting place to invest in within the financial services sector. And at 40 times trailing 12-month free cash flow (revenue minus cash operating expenses and capital expenditures), Intuit looks like a value play in this sandbox. The company's goal is to grow its profitability at a faster pace than sales, and its enviable profit margin (operating margin of 30% in the last year) provides it with a steady stream of cash to invest in its consumer and small business software. A dividend currently yielding 0.6% a year sweetens the deal, and has plenty of room to rise over time.

Granted, Intuit isn't alone in the fintech space. Though it's coming from the digital payments end of the spectrum, Square (NYSE:SQ) has similar aspirations to be a one-stop shop for financial software and services for small businesses and consumers. In fact, Intuit could jump-start a new segment for Square in tax prep and consulting. As part of the Credit Karma acquisition, Credit Karma Tax (a freemium online tax site that competes with TurboTax) was sold to Square for $50 million. For investors looking for all-out growth in the decade ahead, Square gets my nod as the better buy in the fintech space.  

Nevertheless, this is a vast universe with plenty of room for many players to carve out niches for themselves, and Intuit is poised to make the best of consumer and business migration to digital tools. As of the end of October 2020, the company had $5.79 billion in cash, equivalents, and short-term investments, and only $2.36 billion in debt. Adding Credit Karma to the mix will strengthen the company's consumer products portfolio and should contribute to profitable growth as households look for help managing the effects of the pandemic. It may not be the most exciting fintech stock around, but Intuit stock is worth considering for a combination of steady long-term growth and a little income along the way.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.