Intuit dropped 20% yesterday, is this actually a gift or a warning sign?

JR-FlowCapGroup · 2026-05-22T13:46:56+00:00

=== SUMMARY === - The author discusses Intuit (INTU) after a 20% drop, viewing it as a gift from a value perspective. They highlight revenue doubling from $9B to $18B, strong margins, and a low 13x 2026 P/E. - Thesis: Intuit’s moat in tax and accounting software remains intact despite AI fears; the current price offers a generational buying opportunity with management ramping buybacks. - Quality assessment: Well-researched DD with specific financial metrics, valuation multiples, and a clear bear-case rebuttal. Minor reliance on forward estimates, but overall credible. === SENTIMENT === BULLISH === TRADE IDEAS === INTU - LONG | confidence: 0.80 | sentiment: +0.70 Speaker: u/JR-FlowCapGroup Thesis: 1. THE FACT: Intuit trades at 13x 2026 P/E and 11.3x 2027 P/E, with $100B market cap on $20B sales – multiples not seen in over a decade. Revenue doubled from $9B to $18B (2021–2025) and is projected to reach $24B by 2027. 2. THE BRIDGE: The market overreacted to AI disruption fears and a 17% workforce cut, but Intuit’s proprietary tax data and ecosystem create a durable moat. Management is aggressively buying back stock, signaling undervaluation. 3. THE VERDICT: At a ~15x EBIT multiple and strong free cash flow yield (~5%), Intuit offers a margin of safety with growth catalysts (15% CAGR guidance). Initiating a small position now captures upside as the market reprices. 4. RISKS: AI-driven tax automation could erode TurboTax demand; slower-than-expected growth (e.g., 10% vs 15%); macro headwinds delaying multiple expansion; execution risk from restructuring. Timeframe: medium-term Key Points: - Low valuation multiples not seen since 2020 - Revenue doubled; strong margin trends - Buyback ramp signals management confidence - AI risk overstated; data moat intact - History of compounding; cyclical tax business

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Summary

The author discusses Intuit (INTU) after a 20% drop, viewing it as a gift from a value perspective. They highlight revenue doubling from $9B to $18B, strong margins, and a low 13x 2026 P/E.
Thesis: Intuit’s moat in tax and accounting software remains intact despite AI fears; the current price offers a generational buying opportunity with management ramping buybacks.
Quality assessment: Well-researched DD with specific financial metrics, valuation multiples, and a clear bear-case rebuttal. Minor reliance on forward estimates, but overall credible.

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This stock has been on my watchlist for a while now and I could have bought in earlier but I didn't because I bought other businesses instead. I believe Intuit is a great businesses but the businesses I bought or added more of, I believe from a moat perspective, are in a better position. Nonetheless, at current price this stock becomes very attractive from a value investing perspective. It's down 51% YTD and it's even in negative 30% over the past 5 years. There is nothing wrong with the business, the stock was just overvalued and became attractive again. Looking at some metrics the story looks more compelling than when you only look to the stock price. 

Revenue doubled from $9B in 2021 to $18B in 2025 and it's estimated to reach $24B in 2027. Pre tax income went from $2.5B to $4.8B and estimated to reach $5.8B in 2026. That is a close to a 15x EBIT multiple, a figure Warren Buffett would love to start buying. EPS keeps climbing, same with return of capital and currently ramping up their buybacks. The last couple of years have been flat for the company in buybacks. That's a positive sign, meaning, management believes the market is wrong about the skepticism around the business. 

Is AI going to do the taxes for you? Are you going to throw your docs and files into those open source web applications? I believe you still need a middleman because all the data is already there. All your previous filings which makes it easier to do. AI still get a lot wrong. Still simple questions are sometimes though to do. I sometimes put docs into chatgpt and It messes up the numbers which are almost always incorrect. So I still have to do the manual proofreading to see if anything is incorrect/correct. 

I do see some sort of a bear case for Intuit but I think it represent an opportunity not found elsewhere in the current market. It trades at a 13x 2026 PE and an 11.3x 2027 PE, which is not seen for over a decade. A current $100B market cap company generating sales of $20B is a generational buy. Price to free cash flow over 5%. ROA, ROE and ROIC climbing again. Same with gross, operating and net margin. Cash per share around the 25 dollars for a 300 dollar entry price is not seen since COVID 2020 for this company. 

There was some negativity around the business and the growth concerns with some headwinds in turbo tax and cutting 17% in workforce segment. Management stated growth rates of 15% for the coming years. Even if it slows down to 10% or so, we still have major upside from current price. 

I think it will take some time to unwind. I'm taking a small position in this one and see how it plays out. What are your takes on the business and did you initiated a position?

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u/JR-FlowCapGroup Reddit r/ValueInvesting

Intuit trades at 13x 2026 P/E and 11.3x 2027 P/E, with $100B market cap on $20B sales – multiples not seen in over a decade. Revenue doubled from $9B to $18B (2021–2025) and is projected to reach $24B by 2027. The market overreacted to AI disruption fears and a 17% workforce cut, but Intuit’s proprietary tax data and ecosystem create a durable moat. Management is aggressively buying back stock, signaling undervaluation. At a ~15x EBIT multiple and strong free cash flow yield (~5%), Intuit offers a margin of safety with growth catalysts (15% CAGR guidance). Initiating a small position now captures upside as the market reprices. AI-driven tax automation could erode TurboTax demand; slower-than-expected growth (e.g., 10% vs 15%); macro headwinds delaying multiple expansion; execution risk from restructuring.

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