Intuit Inc. (NASDAQ:INTU) Emerges as a Top Affordable Growth Stock

For investors looking to balance the search for growth with a degree of caution, the "Growth at a Reasonable Price" (GARP) or "Affordable Growth" method presents a practical middle path. This method tries to find companies that are showing solid and lasting growth, but whose stock prices are not at extreme levels. It aims to sidestep the speculation of expensive growth stocks while still gaining from developing businesses. A useful method to apply this is by using basic screening tools that grade stocks on important factors such as growth, valuation, profitability, and financial strength. A stock that grades highly on growth while keeping fair valuation measures, backed by good profitability and a sound balance sheet, can be a leading choice for this method.

One company that appears from an "Affordable Growth" filter is INTUIT INC (NASDAQ:INTU), the financial software leader known for TurboTax, QuickBooks, and Credit Karma. Based on a detailed fundamental review, Intuit receives an overall fundamental score of 7 out of 10, with its details showing a combination of solid growth, very good operational results, and a valuation that, while not low-cost, seems fair considering its quality and outlook.

Strong Growth Path

The central idea of an affordable growth method is, expectedly, growth. Intuit performs well here, getting a Growth score of 7. The company is not inactive; it is actively increasing its revenue and profits at a notable rate.

• Past Results: Over the last year, Intuit increased its Revenue by 17.14% and its Earnings Per Share (EPS) by a notable 23.88%. The longer-term averages are even more positive, with Revenue increasing at 19.65% and EPS at 20.77% per year.
• Future Predictions: This progress is forecast to continue, though at a somewhat slower rate. Analysts estimate average yearly EPS growth of 15.50% and Revenue growth of 12.57% for the next few years. This expected growth stays "quite strong," offering a base for future stock price gains.

For a GARP investor, this steady double-digit growth in both historical and forecast measures is necessary. It shows a business with a lasting competitive advantage and effective management, not just a short-lived surge.

A Valuation with Perspective

A high-growth stock is considered "affordable" only when its price does not account for all future potential. Intuit's Valuation score of 5 shows a varied but ultimately fair view when compared to its industry and its own quality.

At first glance, standard measures indicate a higher price. A Price/Earnings (P/E) ratio of 30.17 and a Forward P/E of 23.53 are higher than the wider S&P 500 average. However, the important perspective is found in its industry—software—where valuations are usually higher because of strong margins and scalability.

• Comparative Value: Intuit's P/E ratio is less expensive than almost 65% of other software companies. Its Forward P/E is better than 69% of the industry.
• Cash Flow & EBITDA: The situation is similar with cash-based measures. Its Enterprise Value to EBITDA and Price/Free Cash Flow ratios are less expensive than about 70% of the industry, showing a more appealing valuation on these points.
• Growth Consideration: The PEG ratio, which modifies the P/E for growth, implies a fair valuation. The review states that Intuit's very good profitability and predicted earnings growth above 15% could validate its current multiple.

For the affordable growth investor, this is the essential point: while not a low-price find, Intuit is valued at a comparative discount within its high-achieving sector, and its valuation can be explained by its growth rate and operational quality.

Supporting Factors: Profitability and Financial Strength

A growth prospect based on weak fundamentals is a speculative choice. The affordable growth method reduces this risk by requiring acceptable scores in Profitability and Financial Strength, areas where Intuit does very well with scores of 8 and 7, in that order.

Profitability is a particular strong point. The company produces very good returns on its capital:

• Return on Invested Capital (ROIC): 16.53%, higher than 93% of industry companies.
• Return on Equity (ROE): 21.31%, better than 88% of the industry.
• Operating Margin: 26.72%, above 90% of software firms.

These measures show a very efficient business model with notable pricing ability and scale—a trait that growth investors value.

Financial Strength is sound. The company has a strong Altman-Z score of 9.69, showing very little short-term bankruptcy risk and performing better than 89% of its peers. Its debt is controllable, with a low Debt/Equity ratio of 0.28 and a Debt-to-Free-Cash-Flow ratio under 1, meaning it could pay off all debt with less than a year's cash flow. While its current and quick ratios are typical for the industry, the review finds this is not a problem given its better solvency and profitability.

Conclusion

INTUIT INC makes a practical example for investors using an Affordable Growth or GARP method. It pairs a clear and solid growth story—visible in its past results and future forecasts—with a valuation that is acceptable relative to its high-standard industry group. Importantly, this growth is supported by top-tier profitability and a very sound financial base, lowering the risk often linked to high-growth investments. It is the blend of these elements that makes it a noteworthy option, providing access to a leading software business without an extreme price.

This review of Intuit came from a specific filter for Affordable Growth stocks. If you want to examine other companies that fit similar standards of good growth, fair valuation, and acceptable fundamentals, you can find more possible choices by seeing the complete filter results here.

Disclaimer: This article is for information only and is not financial advice, a suggestion to buy or sell any security, or a support of any investment method. Investors should do their own study and think about their personal financial situation and risk comfort before making any investment choices.