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Is Inuit Stock Overvalued at Current Prices?

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May. 30 2019, Published 9:38 a.m. ET

PE ratio

Intuit stock (INTU) has outperformed the broader indexes for a while now. It has continued to create substantial investor wealth over the years. Will INTU stock continue to rise higher or is it due for a correction? Is the extended bull run over for Intuit investors or will it crush market returns going forward? INTU stock has gained 27.3% this year. The stock is trading 37.0% above its 52-week low of $182.61 but just 8.0% below its 52-week high of $272.14.

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Intuit’s forward PE multiple is 33.55x, and its EPS are expected to rise 17.1% this year and 13.2% in 2020. Its earnings are expected to grow 15.2% compounded annually in the next five years, suggesting the stock is grossly overvalued and has significant downside potential in case of a revenue or earnings miss.

Intuit’s estimated five-year PEG (PE-to-growth) ratio is 2.41x. A PEG ratio above one suggests a stock is overvalued. Considering the PE multiple, INTU stock is overvalued by at least 50%.

How Wall Street views Intuit stock

Of the 22 analysts tracking Intuit, nine recommend a “buy,” 11 recommend a “hold,” and two recommend a “sell.” Their 12-month average target price for Intuit is $255.59, and their median estimate is $256. Intuit stock is trading at a 2.6% discount to its median estimate.

As seen in the above chart, analysts have a low 12-month target estimate of $179.0 and a high target estimate of $310.0.

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