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 ().
ProfileIntuit 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 PerformanceOver the past twelve months the share price is up 27.41%.Source: Google FinanceInputs
Forecasted Free Cash Flows (FCFs)
Terminal ValueTerminal Value = FCF * (1 + g) / (r – g) = 267.70 billionPresent Value of Terminal ValuePV of Terminal Value = Terminal Value / (1 + WACC)^5 = 173.98 billionPresent Value of Free Cash FlowsPresent Value of FCFs = ∑ (FCF / (1 + r)^n) = 34.33 billionEnterprise ValueEnterprise Value = Present Value of FCFs + Present Value of Terminal Value = 208.31 billionNet DebtNet Debt = Total Debt – Total Cash = 1.82 billionEquity ValueEquity Value = Enterprise Value – Net Debt = 206.49 billionPer-Share DCF ValuePer-Share DCF Value = Enterprise Value / Number of Shares Outstanding = $737.48
Conclusion
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%.More By This Author:
