TurboTax creator is up over 850% in the past decade and its stock just won’t go down


The homepage of Intuit Inc.’s TurboTax website is displayed on a computer monitor in Washington, D.C.

Andrew Harrer | Bloomberg | Getty Images

A software company created to help regular people navigate the complexities of the U.S. tax code just entered its 11th year of stock gains.

Intuit, creator of TurboTax, is a stock that just won’t go down as online tax preparation continues to gain popularity.

Shares of Intuit are up about 36% this year, an impressive run for any company in a time-frame filled with economic and political uncertainty. Even more remarkably, Intuit’s stock is up over 850% in the past decade (the S&P 500 is up about 190% in the last 10 years), gaining an average of 25% every single year of the last 10, according to Jefferies.

Intuit “remains a favorite large cap story thanks to market leadership in tax and small biz software,” said Jefferies’ Brent Thill in a note to clients. Jefferies has a buy rating on the stock and a $320 price target.

Intuit, which has a market value of about $69.5 billion, is a computer software company that provides an easy-to-use, do-it-yourself online tax preparation solution called TurboTax and separately, a small business accounting system called QuickBooks.

The rise of online tax filing

Online tax filing has been on the rise as retail and walk-in tax services have gone down in popularity.

In 2019, 68% of people said they were planning to file their taxes online, according to the National Retail Federation’s 2019 Tax Return study. This is up from 53% in 2009.

This trend has boosted Intuit’s growth margins during its decade-long expansion, and this year should be no different, according to Stifel.

“Given Intuit’s dominant position in the DIY space, and the growing momentum behind its TurboTax Live offering in the assisted category, we believe another year of double-digit Consumer Tax growth is well within reach,” said Stifel’s Brad Reback in a note to clients.

Last month, Intuit announced that its online payroll service QuickBooks would now help employees with medical and dental insurance. Jefferies’ Thill said QuickBooks could generate revenues that surprise to the upside, like TurboTax did in 2018.

Strong financials yield good ratings

Intuit’s strong financials speak for themselves, with revenues still growing double digits annually. Revenues grew 13% to $6.8 billion in 2019. Plus, 95% of revenues come from the U.S., making the company disassociated with foreign policy uncertainty.

“We remain bullish on the company’s long- term outlook and expect Intuit to continue to leverage its platform approach to increasingly separate itself from the competition,” said Stifel’s Reback.

Some of Intuit’s biggest competitors are H&R Block, which is down about 5% this year, and Automatic Data Processing, which is up about 22% this year.

Intuit’s strong performance has Wall Street generally fond of its stock with 11 of the 22 analysts that cover the company rating it a buy. Eight analysts are neutral on Intuit and only three analysts advise selling the stock.

— with reporting from CNBC’s Michael Bloom

Leave a Reply

Your email address will not be published. Required fields are marked *