When a company announces a massive share buyback -- as financial software giant and Inside Value recommendation Intuit (NASDAQ:INTU) did Wednesday -- it's usually tethered to something dreadful. Earnings are off. Creditors are whispering. Auditors are bailing. Our CEO is really a computer-generated hologram. Something like that.
However, there was nothing particularly unsavory about the quarterly report that accompanied Intuit's announcment of the $500 million repurchase plan. Losses narrowed during the company's fiscal first quarter, clocking in better than analysts had been expecting, on a 20.3% uptick in revenues. Don't let the loss frighten you. Like H&R Block (NYSE:HRB) and Jackson Hewitt (NYSE:JTX), this is a company for which tax season is king. Intuit traditionally loses a little bit of money in its book-end fiscal quarters, but it more than makes up for it with strong showings in the second and third quarters.
Intuit is now expecting to earn between $1.99 and $2.07 a share during this relatively new fiscal year. Backing out items related to expensing employee stock options lands the company in a profit-per-share range between $2.23 and $2.31. That's comfortably in line with Wall Street's consensus of $2.28 a share in profitability this year.
Intuit has been conservative in previous forecasts. Last year, it originally guided investors to look for no more than $2.01 a share in net income, but it ultimately earned $2.05 in fiscal 2005.
The next few months will tell the tale. The second quarter is fueled by folks kicking off the new year with Quicken and QuickBooks purchases, while TurboTax sales rule in the spring quarter that follows.
Does that mean this is the ideal time to buy into Intuit? Before the attention picks up in the spring, as folks flock to our Tax Center and start speaking in seasonal terms like "1040" and "W-2"?
Not necessarily. I checked the stock's chart over the past few years to see whether the stock had typically bottomed out at the same time that its financials hit a seasonal lull. No such luck. This calendar year, the stock bottomed out in February. Last year, the shares were at their lowest in July. Back in 2003, the low point actually came in April.
That's OK, though. Intuit is still a dynamic company, and while it may not be cheap by conventional standards, the company's consistency is definitely worth today's fair premium. It's just that, unlike its quarterly reports, buying into Intuit seems to be a year-round passion.
Longtime Fool contributor Rick Munarriz is a happy filer with Block's TaxCut program over Intuit's TurboTax. He encourages anyone looking to make last-minute tax moves for 2005 to join the sharp bean-counting crowd in the Tax Strategies discussion board. However, he does not own shares in any company mentioned in this story. The Fool has a disclosure policy. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
