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Why Intuit Stock Soared 69% Higher in 2021

Motley Fool - Thu Jan 6, 12:03PM CST

What happened

Shares of Intuit (NASDAQ: INTU) -- the top fintech company that owns TurboTax, QuickBooks, and Credit Karma -- jumped 69% higher in 2021 according to data provided by S&P Global Market Intelligence. That's on top of the 45% gain in 2020, as Intuit's financial services software is getting a lift from the rapid pace of new small business creation.

Several people gathered around a laptop in an office.

Image source: Getty Images.

So what

According to the U.S. Census Bureau, new business applications have surged to record highs since the start of the pandemic, averaging over 400,000 per month in 2021. While not all businesses will make it, the trend is a clear benefit to Intuit and its stable of software for taxes, accounting, and other financial management.

During its fiscal year 2021 (the 12 months ended July 31, 2021), Intuit's revenue and adjusted operating income increased a respective 25% and 31% year over year. That included the addition of Credit Karma's $865 million in revenue, Intuit having acquired Credit Karma in late 2020.

As for the start of Intuit's fiscal year 2022, Q1 (the three months ended Oct. 31, 2021) revenue and adjusted operating income jumped 52% and 66% year over year -- again getting a big boost from Credit Karma and pushing the stock to record highs.

Now what

Intuit said it expects full-fiscal-year 2022 revenue to increase in the range of 26% to 28%, thanks in no small part to Credit Karma as well as the more recent purchase of customer engagement platform Mailchimp, completed in November.

While other higher-growth fintech stocks are getting beat up recently because of a coming increase in interest rates by the Federal Reserve, Intuit has been stalwart. The company is highly profitable (free cash flow profit margin was 31% in the last 12 months) and is a staple among business owners and households. However, with shares now trading for a premium 51 times trailing 12-month free cash flow at the onset of the new year, a repeat of last year's performance may not be in order. But this financial software conglomerate certainly still has a lot of positive catalysts working in its favor. Intuit is a great place to start for investors wanting to get started in the fintech space.

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Nicholas Rossolillo and his clients have no position in any of the stocks mentioned. The Motley Fool owns and recommends Intuit. The Motley Fool has a disclosure policy.