Software maker Intuit
However, net profits for the period eased 1% from a year-ago level. Intuit's popular consumer software program Quicken -- which has seen increased competition from Microsoft's
Since the bulk of Intuit's sales are driven by the tax season, there's a definite seasonal effect here. Sales of the consumer tax prep software TurboTax really ramp up in the third quarter because U.S. taxpayers delay filing returns until closer to the April 15 deadline. (Makes sense to me.) The upcoming third quarter is Intuit's most profitable period of the year. Historically the first and fourth quarters end in red ink, which means Intuit bats .500, financially speaking. So Foolish investors might be asking, "Given Intuit's seasonality, what's the bigger picture here?"
Annual growth as a whole is the more important focal point. Let's take a look back at some trends to see whether we can predict the future. (I don't claim to be a fortune-teller, but I will pretend to be one for this exercise.)
First, revenues have grown at a double-digit rate five out of the last six quarters. Sounds good, right? Yes, it does, but -- and there is always a but -- what about the future trend? When you compare the year-over-year increases, the projections going forward fall a bit short. Total revenues climbed by 13% to $1.85 billion in 2004. The company has forecast ~9% growth in fiscal 2005, a 30% slowdown from the previous year. It's to be expected that a maturing company will see a slowdown in the rate of growth, and perhaps that is part of the reason for the lackluster performance in the stock price. Intuit is down about 10% over the last 12 months.
So is the stock a good value? Looking into my Foolish crystal ball -- silence, please -- earnings are expected to rise 18% for 2005. At $40 Intuit trades with a forward P/E of 18, so the stock seems attractive on a valuation basis. While there are concerns about competition with TurboTax from rivals such as H&R Block
For more Foolishness check out Quicken vs. Money.
Fool contributor Kelvin Taylor does use Quicken and TurboTax but does not own shares of any of the companies mentioned.