Intuit Inc (INTU) DCF Valuation: Is The Stock Undervalued?
As part of a new series, each week we typically conduct a DCF on one of the companies in our screens. This week we thought we’d take a look at one of the stocks that is not currently in our screens, Intuit Inc (INTU).
Profile
Intuit is a provider of small-business accounting software (QuickBooks), personal tax solutions (TurboTax), and professional tax offerings (Lacerte). Founded in the mid-1980s, Intuit controls the majority of US market share for small-business accounting and do-it-yourself tax-filing software.
Recent Performance
Over the past twelve months the share price is up 27.41%.
Source: Google Finance
Inputs
- Discount Rate: 9%
- Terminal Growth Rate: 4%
- WACC: 9%
Forecasted Free Cash Flows (FCFs)
| Year | FCF (billions) | PV(billions) |
| 2025 | 6.01 | 5.51 |
| 2026 | 7.27 | 6.12 |
| 2027 | 8.8 | 6.80 |
| 2028 | 10.64 | 7.54 |
| 2029 | 12.87 | 8.36 |
Terminal Value
Terminal Value = FCF * (1 + g) / (r – g) = 267.70 billion
Present Value of Terminal Value
PV of Terminal Value = Terminal Value / (1 + WACC)^5 = 173.98 billion
Present Value of Free Cash Flows
Present Value of FCFs = ∑ (FCF / (1 + r)^n) = 34.33 billion
Enterprise Value
Enterprise Value = Present Value of FCFs + Present Value of Terminal Value = 208.31 billion
Net Debt
Net Debt = Total Debt – Total Cash = 1.82 billion
Equity Value
Equity Value = Enterprise Value – Net Debt = 206.49 billion
Per-Share DCF Value
Per-Share DCF Value = Enterprise Value / Number of Shares Outstanding = $737.48
Conclusion
| DCF Value | Current Price | Margin of Safety |
|---|---|---|
| $737.48 | $621.11 | 15.78% |
Based on the DCF valuation, the stock is undervalued. The DCF value of $737.48 share is higher than the current market price of $621.11. The Margin of Safety is 15.78%.
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