Intuit Inc. (INTU)

Total return at 5 years: 22.1%/year = 20.2% appreciation + 1.9% dividend. The target price ($769) is ex-dividend; the $43 in dividends collected over 5 years are added separately.

By both methods, the value today (DCF $644 · Multiples $654) exceeds the market price ($306).

Today — with margin of safety: at $306 trades ~53.2% below its value discounted to today (~$654) — the wide discount we require (≥38%, equivalent to a ~15% annual return); the risk is covered by the margin, not the rate.

At 5 years — Muy infravalorado: the target price ($769) plus dividends yield above the required average return (10%) — the business compounds.

The bridge: the return at 5 years comfortably exceeds the risk-free rate (4.5%) — and the discount reaches the required margin of safety.

Educational / informational. Does not constitute investment advice.

The inverse approach: instead of projecting growth to obtain the value, the market price ($306) is taken as given and it solves for what annual owner-earnings growth would need to hold for 5 years for the present value —at the method's rate (4.5%, no-growth terminal)— to equal that price. It is the disconfirmation test: the expectations the price already pays for, contrasted against the method's projection.

The market discounts less growth (-4.0%/year) than we project (12.7%/year) → if the base case holds, there is margin: perception is more pessimistic than the estimated reality.

That growth implies ~$3.7 bn of owner earnings in year 5 (vs ~$8.1 bn of our base case). It recalculates if the DCF assumptions are edited.

Year-by-year projection of the selected scenario. From each year, two versions of the flow are derived: growth FCF (operating flow − total capex, the cash surplus) and maintenance FCF (the owner earnings: what the business yields if it only sustains its capacity). The flow is returned almost in full (dividend + buyback) or redeployed into the operation, so that EV stays roughly flat and multiples compress because the metric grows, not because of cash accumulation. The valuation is done on EV/NOPAT. In edit mode, revenue, margins, capex, and exit multiples can be adjusted.

Year-0 is fiscal 2026, closed on July 31, 2026 and presented in the September 9, 2026 annual report: revenue of US$21,448 million, operating income of US$5,884 million, net income of US$4,566 million, and operating cash flow of US$8,838 million. The twelve-month rolling grid coincides with the fiscal year because Intuit's fiscal year ends July 31. Intuit is valued as a sum of the parts across four businesses of distinct economic nature, with one caveat the annual report introduces: since August 1, 2025 the company merged Consumer, Credit Karma, and ProTax into a single reportable segment, so it now publishes segment operating income only for Global Business Solutions (US$9,887 million on US$12,864 million of revenue, 76.9%) and Consumer (US$6,308 million on US$8,584 million, 73.5%). Each piece's revenue is still published, in the segment note's revenue-by-product-type table: Global Business Solutions US$12,864 million, TurboTax US$5,296 million, Credit Karma US$2,641 million, and ProTax US$647 million. Each piece's share of segment operating income at year 5 is built by projecting that revenue on its own path and applying the fiscal 2026 segment margin: Global Business Solutions' own margin for that piece, and Consumer's, applied uniformly, for the other three. That the margin is uniform within Consumer is an assumption forced by the segment merger and is stated as such, because the company stopped publishing Credit Karma's and ProTax's margins separately. This yields shares of 66.47%, 18.60%, 12.75%, and 2.18%. Each piece's multiple comes from its band. Global Business Solutions at 24 times within the 20-to-30-times enterprise-software band, and not higher because the segment still includes Mailchimp, which the company guides flat for fiscal 2027 and is splitting out as its own segment starting August 1, 2026 without yet publishing its individual revenue. TurboTax at 16 times and ProTax at 15 times within the 14-to-20-times mature-software band. Credit Karma at 20 times within the 18-to-25-times intermediation-platform band. The base case's blended multiple is the weighted sum of the four: 21.8 times after-tax operating income, within the archetype's band. Year 1 of the path does not come from the trajectory but from fiscal 2027's current guidance, published in the August 25, 2026 release, and is read through its two anchors. In revenue: US$23,279 to US$23,512 million, that is, between 8.5% and 9.6% over fiscal 2026's US$21,448 million; the base case takes the midpoint (9.1%), the adverse case the lower end, and the favorable case the upper end. In earnings: operating income of US$7,408 to US$7,490 million, which on that same revenue implies an operating margin of 31.8% at both ends of the range, and earnings per share of US$20.12 to US$20.36, between 22% and 24% over fiscal 2026's US$16.46. The margin jump from year-0's 27.4% has two verifiable components: fiscal 2026 carried US$293 million of restructuring, and excluding that charge the margin was 28.8%; and the reorganization plan approved in May 2026, with an estimated total cost of US$315 million, is substantially complete in the first quarter of fiscal 2027. From that point the path decays smoothly, with no steps: 9.1%, 8.7%, 8.2%, 7.7%, and 7.3% in year 5. The build is by piece and the consolidated figure is their sum, not a top-down rate: Global Business Solutions decelerates from the 11.7% that results from adding its guidance to Mailchimp's, down to 8.7%; TurboTax runs at 2% to 3%, which is what is guided; Credit Karma decelerates from the guided 11.6% to 8%; ProTax holds at 2%. The operating margin keeps expanding from the guided 31.8% to 33.7% in year 5, supported by operating leverage and by the fact that amortization of acquired intangibles, US$659 million in fiscal 2026 on a net base of US$4,642 million, dilutes against growing revenue. The adverse scenario does not assume year 1's guidance fails, since it is published and the cost plan has already been executed, but rather that the margin erodes afterward: 31.8% in year 1 and 28.0% in year 5, below even fiscal 2026's 28.8% excluding the restructuring charge. The tax rate is 24%, the effective rate the company publishes for fiscal 2026. Fiscal 2025's 20% is not used: the company itself clarifies that, excluding certain tax benefits tied to stock-based compensation, that rate was also approximately 24%. The metric expenses stock-based compensation in full, because after-tax operating income starts from GAAP operating income, which already includes it as an expense: US$2,056 million in fiscal 2026, 9.6% of revenue and 23.9% of free cash flow. Materiality is measured against the flow and at that level it is high, so the correct metric is the one that charges it and never a flow that adds it back. Year-0's operating cash flow margin is the reported figure, 41.2%, and is not extrapolated. It contains US$1,279 million of non-cash deferred taxes, against a negative US$435 million in the prior fiscal year, corresponding to the drawdown of the long-term deferred tax asset: it fell from US$1,222 million to US$172 million during the year. Without that movement, fiscal 2026 operating cash flow is about US$7,559 million, 35.2% of revenue, practically the same level as fiscal 2025 treated the same way (35.3%). The path starts there and tracks the operating margin's expansion up to 37.7% in year 5. Year-0's capital expenditure is US$221 million: the sum of the two cash flow statement lines, purchases of property and equipment of US$175 million and capitalized internal-use software of US$46 million, which the earnings release presents consolidated in a single line. It equals 1% of revenue and sits well below depreciation and amortization of US$846 million (US$187 million of depreciation and US$659 million of amortization of acquired intangibles), so it is treated as maintenance almost in its entirety. The change in working capital is US$296 million: the US$4 million from the line for changes in operating assets and liabilities, plus the US$292 million of net growth in the QuickBooks Capital credit book, which comes from US$6,755 million of originations and purchases against US$2,210 million of sales and US$4,253 million of principal repayments. The bridge's cash is US$7,200 million: the company reports that its cash, equivalents, and investments totaled that figure as of July 31, 2026 and that none of it was restricted. Against total debt of US$7,669 million, of which US$1,249 million is current and US$6,420 million non-current, the net position is slightly net-debt, at US$469 million. The prior version of the record stated a positive net-cash position because it compared a cash figure that included investments against a debt figure that omitted the current portion; the bridge and the prose now use the same definition on both sides. The share count is the point-in-time figure at period end, 268.384 million at July 31, 2026 against 279.129 million a year earlier. The buyback path is a single one for the three scenarios and runs at 3.0% annually. The three windows of revealed behavior are a 3.85% decline over twelve months, 2.14% annually over two years, and 1.46% annually over three; it is modeled below the twelve-month figure because fiscal 2026 was a peak, with the buyback going from US$2,772 to US$5,412 million per the company's own release, and because the remaining US$7,900 million authorization covers about a year and a half at that pace. Capacity is not the constraint: free cash flow less the dividend equals 8.1% of the market value. The retained surplus does not accumulate cash. The cash-and-equivalents series at the close of each fiscal year held between US$2,562 and US$3,609 million from 2021 to 2025, and the jump to US$4,705 million in 2026 is explained by the US$1,736 million of notes issued in June 2026, which the company states are earmarked to meet fiscal 2027 maturities. Moreover, the cash going out on the shareholder's account exceeds the buyback: fiscal 2026 added US$709 million of employee taxes withheld on the vesting of restricted stock, against US$180 million of contributions from stock plans. That is why the model treats the surplus as redeployed rather than crediting it as growing cash; it is a sub-credit, disclosed with the number that trims it, and the buyback is already imputed in the share-count path so the same flow is not counted twice.

Today's elevated multiple is the price of growth: if the business grows, the entry point cheapens on its own going forward (the metric grows while EV stays roughly flat). The exit multiple at 3 years is higher than the terminal at 5 years —at 3 years there is more growth still ahead—, so the value curve shows whether value creation is concentrated in the early or the later years. The required return is applied to the base scenario.

They are valued separately, with their own rationale, and are not incorporated into the base or the verdict (they are excess return). When assigning them value — in Editmode —, the total with optionalities updates live, without moving the base.

The verdict, the base CAGR, and the margin of safety are always calculated on the base; optionalities do not alter them (with optionalities at $0 they do not move).

Each card fixes a required annual return and answers: if the business is worth $769 in 5 years, what is the maximum that can be paid today to obtain that return? Since it now trades at $306, the margin of safety is how much cheaper the market is than that maximum. The three thresholds: 4% covers inflation (the floor), 10% is the long-term average return, and 15% is the level of a great investment.

With a target price of $769 in 5 years plus $43 of dividends collected (the dividend adds to the return, not to the price) and a required return of 4.5% annually, the maximum to pay today is $654. Against the current market price ($306), the margin of safety is 53.2% (trades below the maximum → there is margin) and the total return at that price would be 22.1% annually.

• Sum-of-the-parts valuation. Each business line with its own exit multiple derived from the band for its economic nature.
• Entry multiple today. The market price is compared against the blended multiple derived from the four pieces (19×).
• Estimated 5-year return. +22% estimated compound annual return at the current market price.
• Margin of safety. There is a margin of safety: the market's perception is meaningfully worse than reality.
• Market reaction to the May 2026 release. On May 21, 2026 the stock fell sharply in the session following a release that raised consolidated guidance and announced the reorganization plan.

Each margin over sales, year by year: historical (solid line) → projection (dotted).

• ✓ ROIC exceeds the cost of capital (~10%)
• ✓ CFROIC backs up the ROIC (108%, cash vs. accruals)
• ✓ Healthy balance sheet (low corporate debt)
• ✓ Durable competitive moat (multiple advantages)

• ROIC vs. the 10% bar. Return on invested capital of 23.0%, well above the 10% bar, in a business whose capital expenditure was 1% of revenue.
• Cash conversion. Operating cash flow was US$8,838 million against net income of US$4,566 million, though US$1,279 million of that difference is non-cash deferred taxes that do not recur at that magnitude.
• Stock-based compensation. US$2,056 million in fiscal 2026: 9.6% of revenue and 23.9% of free cash flow. Material, and expensed in the valuation metric because after-tax operating income starts from a GAAP figure that already includes it.
• Working capital. The line for changes in operating assets and liabilities consumed US$4 million, and the QuickBooks Capital credit book US$292 million net of repayments and sales: a modest use of cash against the flow generated.
• Balance sheet. Cash, equivalents, and investments of US$7,200 million, none of it restricted, against total debt of US$7,669 million: a slightly net-debt position.

Annual levels from the official filing (10-K); the % over each bar is the year-over-year (YoY) growth vs the prior year.

The four revenue lines do not nest subcomponents that duplicate the consolidated figure and sum exactly to the fiscal year's total revenue. Global Business Solutions breaks down into QuickBooks Online Accounting, online services (payroll, payments, and QuickBooks Capital), and the desktop ecosystem; Credit Karma, into referral fees by financial vertical. Since August 1, 2025 the company reports only two segments —Global Business Solutions and Consumer— so each line's revenue is still published but Credit Karma's and ProTax's segment operating income no longer is. The buyback is included as a separate series because it is the dominant capital return lever and underpins the declining share-count path used in the valuation.

The % are the annual (year-over-year) growth: each year —historical and projected— vs the prior one; the TTM (trailing 12m) vs the TTM of a year ago, to avoid overlapping windows. The historicals are exact figures from the official filings; the projected years come from the year-by-year model (the intermediate years without their own series are interpolated between the anchors). The projected columns (+1y…+5y) are 12-month windows counted from the TTM close (31-jul-2026): the projection starts from the most recently reported data, not the fiscal year. The projected base is realistic and unbiased — the risk discount is applied at the end, via the required return. The rationale for each metric is in the (i).

• Fiscal 2026 growth. Revenue of US$21,448 million, up 13.9%, with operating income growing 20% and earnings per share 20%.
• Fiscal 2027 guidance. Revenue of US$23,279 to US$23,512 million, between 8.5% and 9.6%: a clear deceleration from the prior fiscal year's 13.9%.
• Global Business Solutions. The largest segment (60% of revenue) guided to 13%-14% for fiscal 2027, excluding Mailchimp, which is guided flat.
• TurboTax. Guided to 2%-3% for fiscal 2027 after growing 7% in 2026, with total federal units already falling 2% and desktop units 7%.
• Credit Karma. Grew 20% in fiscal 2026 to US$2,641 million and is guided to 11%-13% for 2027.
• International penetration. Just 8% of revenue comes from outside the United States, leaving a geographic expansion runway still untapped.

• Revenue recurrence. Global Business Solutions is mostly subscription-based; TurboTax and ProTax have structural seasonality concentrated in tax season.
• Product differentiation. QuickBooks and Intuit Enterprise Suite differentiate on integration and data, not on price.
• Operating leverage. Segment operating margin was 76.9% in Global Business Solutions and 73.5% in Consumer, and fiscal 2027 guidance brings the consolidated margin from 27.4% to 31.8% with revenue growing less than 10%.
• Public competition risk. The fiscal 2026 annual report states that the federal tax authority's free direct-file system has been suspended, but maintains that its proponents continue to advocate for it and that the legacy free-filing program through commercial software could expand.
• Geographic concentration. International revenue was approximately 8% of the consolidated total in each of the last three fiscal years.
• Pricing power. QuickBooks Online Accounting grew 23% in fiscal 2026, driven in part by higher effective pricing; at TurboTax, price sustained a 7% revenue increase with units falling 2%.

Not all debt is equal: only the structural needs refinancing; the rest is operational (self-liquidating).

Structural debt is what is exposed to the contraction phase of the cycle; operational debt (leases, matched funding) self-liquidates with the business.

• ✓Leverage (net debt / EBITDA)Net debt / EBITDA 0.1x
• ✓Interest coverage (EBIT / interest)23.0x
• –Liquidity (current ratio)no data
• ✓Cash quality (CFROIC vs ROIC)CFROIC backs 108% of ROIC
• ✓Value creation (ROIC − 10% bar)+13pp
• ✓Malinvestment test (capex vs incremental ROIC)Capex/D&A 0.3x — no over-investment
• !Float / working capitalConsumes cash $0.3 bn (positive WC)
• !Dilution (SBC % of revenue + shares)SBC 9.6% of revenue

A traffic-light interpreted by the method (not generic): float (negative WC) adds up, capex is judged by incremental ROIC (malinvestment test), and a lender is not subjected to corporate solvency. The (i) shows the derivation of each number.

• Net cash. Cash, equivalents, and investments of US$7,200 million, unrestricted, against total debt of US$7,669 million: net debt of US$469 million.
• Leverage. Total debt equals 0.87 times the fiscal year's operating cash flow and 1.30 times operating income: ample coverage.
• Maturity profile. US$1,249 million matures within fiscal 2027 and is pre-funded with the US$1,736 million of notes issued in June 2026.

Who owns the shares — the alignment and whether there is a controlling shareholder.

• CEO continuity. Sasan Goodarzi has led since January 2019 after prior roles as head of the Small Business Group and the company's chief information officer.
• Reorganization plan. The plan approved in May 2026 has an estimated total cost of US$315 million, of which US$293 million was recognized in fiscal 2026, and it is substantially complete in the first quarter of fiscal 2027.
• Capital return. The buyback went from US$2,772 to US$5,412 million, up 96%, with a remaining authorization of US$7,900 million, and the quarterly dividend rose 15% to US$1.38 per share.
• Transparency of the non-GAAP measure. Since August 1, 2026 the company no longer excludes stock-based compensation from its non-GAAP measures, and states that it considers it a recurring component of compensation. It is a change that tightens its own presentation.

• The market re-rated software throughout 2026 under the thesis that generative models erode the value of guiding a non-expert user, which is exactly the function the company monetizes in TurboTax and QuickBooks. The stock trades today at $306.
• On May 21, 2026, the day after the third-quarter release, the stock fell sharply in the same session in which the company raised its consolidated guidance and announced the reorganization plan.
• Fiscal 2027 guidance decelerates revenue from 13.9% to a range of 8.5%-9.6% and brings TurboTax from 7% to 2%-3%: the market reads that as confirmation of the tax franchise's deterioration.
• Two shareholder class-action lawsuits filed on July 10 and August 17, 2026 in the Northern District of California keep public focus on the strength of that franchise, regardless of how they are resolved.

The catalyst is identified and is not a mystery: the re-rating of software during 2026 under the artificial-intelligence disruption thesis, capped off by the May 21, 2026 collapse and confirmed in the market's eyes by decelerating revenue guidance. The discrepancy between perception and reality is that the price weighs only one half of that guidance. The same table that lowers revenue to 8.5%-9.6% raises operating income 26%-27% and earnings per share 22%-24%, meaning the operating margin goes from 27.4% to 31.8%: the company is guiding less volume and much more earnings. Added to that is a fact the annual report introduces that runs counter to the adverse thesis: the federal tax authority's free direct-file system, which the company had been calling an expanding threat, was suspended. That is a positive and verifiable source, not the absence of an explanation. The disconfirmer of this reading is in the same report and can be checked quarter by quarter: TurboTax's total federal units fell 2% in fiscal 2026, to 39.0 million from 39.9 million, and desktop units fell 7%, so segment revenue is held up by price and the mix shift toward assisted service. If volume keeps giving ground and the 2%-3% guidance turns out to be the ceiling rather than the floor, the market's reading stops being an exaggeration.

The annual return (CAGR at 5 years) in each scenario, with the total period return below — the margin of safety made visual: upside range wide, downside range narrow.

Even in the bear scenario, the return holds at +10%/year (+64% total): the margin of safety protects the downside. The bull (+29%/year, +253% total) exceeds it comfortably — a favorable asymmetry, with a narrow downside range and a wide upside range.

• Public competition in consumer tax. The federal tax authority's free direct-file system was suspended, but the legacy free-filing program through commercial software remains in effect and the company warns that its adoption could expand.
• Consumer business deceleration. TurboTax guided to 2%-3% for fiscal 2027 after growing 7%, with unit volume already declining.
• Security incidents. Intuit hosts extremely sensitive information (credit cards, tax returns, bank accounts) and states it has been the target of cyberattacks in the past.
• Structural seasonality. TurboTax and ProTax revenue is heavily concentrated between November and April; any service disruption during tax-season peak could cause significant revenue declines.
• Shareholder litigation. Two class-action lawsuits filed on July 10 and August 17, 2026 in the Northern District of California allege false or misleading statements in 2025 and 2026; a lead plaintiff has not yet been designated.
• Credit risk in small-business financing. QuickBooks Capital exposes Intuit to borrower default risk; the book grew a net US$292 million during the fiscal year and the allowance for expected losses was US$237 million.

Each thinker's analytical framework applied to our data.

• Buffett / Graham Quality + margin of safety

  A wide moat and ROIC 23% above the 10% bar, with a +53% margin → a quality business at a good price.

• Peter Lynch Growth at a reasonable price (GARP)

  A fast grower growing 13% at a multiple/growth of 1.5 → reasonable for its growth.

• Joel Greenblatt Cheap and high-return (Magic Formula)

  Earnings yield 7% (EBIT/EV) + ROIC 23% → brushes the Magic Formula.

• Howard Marks Perception vs reality + cycle

  The price discounts -4% vs our 13%: perception is more pessimistic than reality, with an identified source of the discount.

• Seth Klarman Capital protection (bear scenario)

  Bear-scenario floor +8%/yr, bull-scenario ceiling +27%/yr over 5y and a +53% margin → capital protected, asymmetry in your favor.

• Pat Dorsey Moat strength (Five Rules)

  A wide moat, stable; sources: switching costs, network effects, efficient scale, intangibles → passes the Five Rules.

• Aswath Damodaran Expectations implied by the price

  Justifying the price requires discounting -4%, within what we project (13%) — the story squares with the numbers.