What is INTU's Intrinsic value?

Intuit Inc (INTU) Intrinsic Value Analysis

Executive Summary

As of July 16, 2025, Intuit Inc's estimated intrinsic value ranges from $140.80 to $421.85 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $421.85 -43.4%
Discounted Cash Flow (5Y) $337.03 -54.8%
Dividend Discount Model (Multi-Stage) $267.53 -64.1%
Dividend Discount Model (Stable) $312.13 -58.2%
Earnings Power Value $140.80 -81.1%

Is Intuit Inc (INTU) undervalued or overvalued?

With the current market price at $745.95, the stock appears to be significantly overvalued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Intuit Inc's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
  2. Dividend Discount Model (DDM): Values the company based on expected future dividend payments
  3. Earnings Power Value (EPV): Values the company based on its current earnings power, assuming no growth

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.73 0.97
Cost of equity 7.2% 10.3%
Cost of debt 4.0% 4.5%
Tax rate 18.0% 19.0%
Debt/Equity ratio 0.03 0.03
After-tax WACC 7.1% 10.1%

Valuation Methods

1. Discounted Cash Flow (DCF) Valuation

Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:

  • Forecast Period: 5-year DCF and 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 8.6% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $16,285 (FY07-2024) to $37,278 (FY07-2034)
  • Net profit margin expansion from 18% to 22%
  • Capital expenditures maintained at approximately 2% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $337 $94,976M 82.9%
10-Year Growth $422 $118,637M 69.0%
5-Year EBITDA $637 $178,607M 90.9%
10-Year EBITDA $729 $204,233M 82.0%

2. Dividend Discount Model (DDM)

The DDM values a company based on its expected future dividend payments. We used two approaches:

Multi-Stage DDM:

  • Current payout ratio: 33.1%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 8.8%
  • Long-term growth rate: 4.0%
  • Fair value: $267.53 (-64.1% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 10.3% (Low) to 7.2% (High)
  • Long-term growth rate: 3.0% (Low) to 5.0% (High)
  • Fair value range: $119 to $505
  • Selected fair value: $312.13 (-58.2% from current price)

3. Earnings Power Value (EPV)

EPV assesses a company's value based on its current normalized earnings power, assuming no growth.

EPV Component Value
Normalized Earnings $3,361M
Discount Rate (WACC) 10.1% - 7.1%
Enterprise Value $33,165M - $47,315M
Net Debt $963M
Equity Value $32,202M - $46,352M
Outstanding Shares 279M
Fair Value $115 - $166
Selected Fair Value $140.80

Key Financial Metrics

Metric Value
Market Capitalization $208083M
Enterprise Value $209046M
Trailing P/E 60.00
Forward P/E 61.27
Trailing EV/EBITDA 35.45
Current Dividend Yield 55.07%
Dividend Growth Rate (5Y) 16.52%
Debt-to-Equity Ratio 0.03

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Discounted Cash Flow (10Y) 30% $126.55
Discounted Cash Flow (5Y) 25% $84.26
Dividend Discount Model (Multi-Stage) 20% $53.51
Dividend Discount Model (Stable) 15% $46.82
Earnings Power Value 10% $14.08
Weighted Average 100% $325.22

Investment Conclusion

Based on our comprehensive valuation analysis, Intuit Inc's intrinsic value is $325.22, which is approximately 56.4% below the current market price of $745.95.

Key investment considerations:

  • Strong projected earnings growth (18% to 22% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.03)
  • Historical dividend growth of 16.52%

Given these factors, we believe Intuit Inc is currently significantly overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.