I can't say I'm surprised by Mr. Market's reaction to Intuit's
And that appears to be Intuit's sin. Well, here's the scope of the sin. I'm paraphrasing here, but Intuit basically said, "Hey, you know, TurboTax isn't selling like hotcakes in the retail channel, or at least not as hot as we'd hoped. We think we'll do about $2.30 a share next quarter."
Mr. Market promply spit his chai-cappu-double-caffeine-half-skimfat-cafe-mocha-cino all over his Brooks Brothers button-down and responded, "But . we were expecting $2.32!"
Never mind that Intuit already gave Mr. Market $0.02 more than he was expecting for this quarter. For that 0.8% might-not-even-happen shortfall, Mr. Market is whacking Intuit shares by 10% today. Does that make sense to you? Me, neither. But remember, in the short term, Mr. Market is a moron.
Let's take a look at the rest of what we've got. Intuit's growth engine looks like it's churning along nicely to me. As I mentioned in my Fool By Numbers roundup, a timing shift in Intuit's tax software revenue juiced growth there, but overall revenue growth still ticks in at a decent 9%. QuickBooks revenue was up a stronger 16%, and that in the face of competition from Microsoft
The thing about Intuit is that, unlike other tax-time wonders such as H&R Block
In fact, Intuit's GAAP earnings are expected to increase several percentage points more than revenues, so what's the worry? Well, again, Mr. Market is edgy, and tossing even a tiny bit of cold water on the all-important tax season is going to send him shivering.
Personally, I'd be more concerned about the 59% drop in free cash flow for the first half of this year, as compared to last year. Net income from continuing operations was about the same, so the culprit looks to be a slew of changes in operating assets and liabilities that tagged cash flow for -$138 million this year vs. -$60 million last year. Often, these timing issues have a way of working themselves out over the course of the year. Sometimes they don't. I think Intuit investors can probably afford to stay calm in the face of today's tempest in a teapot, but keep an eye on that cash flow to make sure there aren't real waves on the horizon.
For further intuition on Intuit:
Seth Jayson still does his taxes with a box o' Crayolas. At the time of publication, he had shares of Microsoft but no positions in any other company mentioned here. View his stock holdings and Fool profile here . Fool rules are here .