Intuit Inc. Stock Buy Recommendation Reiterated (INTU)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Intuit (Nasdaq: INTU) has been reiterated by TheStreet Ratings as a buy with a ratings score of B. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

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Highlights from the ratings report include:
  • INTUIT INC's earnings per share declined by 42.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, INTUIT INC increased its bottom line by earning $2.52 versus $2.02 in the prior year. This year, the market expects an improvement in earnings ($3.34 versus $2.52).
  • INTU's debt-to-equity ratio is very low at 0.18 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.86 is somewhat weak and could be cause for future problems.
  • The gross profit margin for INTUIT INC is currently very high, coming in at 83.80%. Regardless of INTU's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, INTU's net profit margin of 7.33% is significantly lower than the industry average.
  • INTU, with its decline in revenue, slightly underperformed the industry average of 1.5%. Since the same quarter one year prior, revenues slightly dropped by 3.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Software industry and the overall market, INTUIT INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.

Intuit Inc. provides business and financial management solutions for small businesses, consumers, accounting professionals, and financial institutions primarily in the United States, Canada, the United Kingdom, India, and Singapore. Intuit has a market cap of $17.8 billion and is part of the technology sector and computer software & services industry. The company has a P/E ratio of 25.00, above the S&P 500 P/E ratio of 18.00. Shares are up 0.8% year to date as of the close of trading on Thursday.

You can view the full Intuit Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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