Intuit Inc. (INTU) provides financial management and compliance products and services for consumers, small businesses, self-employed, and accounting professionals worldwide. The Mountain View, Calif., company operates in four segments: Small Business & Self-Employed; Consumer; Credit Karma; and ProConnect. In comparison, New York City-based MongoDB, Inc. (MDB) provides a general-purpose database platform worldwide. The company offers MongoDB Enterprise Advanced, MongoDB Atlas, and Community Server. It also provides professional services, including consulting and training.
Threats related to data security, especially on cloud-based platforms, continue to hamper the enterprise software market’s growth. Nevertheless, the enterprise software market is still expected to grow rapidly in the coming months on increasing demand from almost every industry as part of widespread digital transformation efforts. Furthermore, the resurgence of COVID-19 cases is leading to a resurgence in hybrid working arrangements, which is benefitting the enterprise software industry. According to a Statista report, the worldwide enterprise software market is expected to grow at an 8.74% CAGR between 2021 – 2026. So, both INTU and MDB should benefit.
INTU’s shares have gained 15.8% in price over the past month, while MDB has returned 0.5%. Also, INTU’s 65.6% gains over the past nine months are significantly higher than MDB’s 27.4% returns. Furthermore, INTU is the clear winner with 80.1% gains versus MDB’s 41.3% returns in terms of their year-to-date performance.
But which of these two stocks is a better buy now? Let’s find out.
On November 1, 2021, INTU completed its acquisition of Mailchimp, a global customer engagement and marketing platform for growing small and mid-market businesses. Sasan Goodarzi, CEO of INTU, said, “We’ll expand our AI-driven expert platform by integrating Mailchimp and QuickBooks in smart ways that will help businesses from start-up to scale-up grow and run with confidence.”
On November 4, MDB announced the company’s certification for compliance with ISO 27017:2015 and ISO 27018:2019 on top of its existing ISO 27001:2013 certification, and completion of its Cloud Security Alliance Security Trust and Risk Level 2 certification. These certifications demonstrate the maturity of MDB’s processes and programs against the highest international standards and further demonstrate its commitment to ensure customers’ security and privacy.
Recent Financial Results
INTU’s revenue increased 52% year-over-year to $2.01 billion for its fiscal first quarter, ended October 31, 2021. The company’s non-GAAP operating income grew 66% year-over-year to $555 million, while its non-GAAP net income came in at $423 million, representing a 69.2% year-over-year increase. Also, its non-GAAP EPS was $1.53, up 63% year-over-year.
MDB’s net revenue increased 44% year-over-year to $199 million for its fiscal second quarter, ended July 31, 2021. However, the company’s operating loss grew 45.6% year-over-year to $72.50 million, while its net loss came in at $77.10 million, representing a 19.5% year-over-year increase. Also, its loss per share was $1.22, up 10.9% year-over-year.
Past and Expected Financial Performance
INTU’s revenue and total assets have grown at CAGRs of 18.9% and 44.5%, respectively, over the past three years. Analysts expect INTU’s revenue to increase 26.2% in its fiscal year 2022 and 14.6% in its fiscal 2023. The company’s EPS is expected to grow 164.7% for the quarter ending January 31, 2022, and 19.4% in fiscal 2022.
In comparison, MDB’s revenue and total assets have grown at CAGRs of 50.1% and 50.9%, respectively, over the past three years. The company’s revenue is expected to increase 37.7% in its fiscal year 2022 and 31.3% in fiscal 2023. However, Its EPS is expected to decline 3% for the quarter ending January 31, 2022, and 14.1% in its fiscal year 2022.
INTU’s $10.32 billion trailing-12-month revenue is significantly higher than MDB’s $702.17 million. INTU is also more profitable with EBITDA and net income margins of 28.01% and 20.28%, respectively, compared to MDB’s negative values.
Furthermore, INTU’s 27.93%, 12.80%, and 15.64% respective ROE, ROA, and ROTC, compare with MDB’s negative values.
In terms of trailing-12-month EV/S, MDB is currently trading at 46.99x, which is 151.3% higher than INTU’s 18.70x. And MDB’s 49.78x trailing-12-month P/B ratio is 159.3% higher than INTU’s 19.20x.
So, INTU is relatively affordable here.
INTU has an overall B rating, which equates to a Buy in our proprietary POWR Ratings system. In contrast, MDB has an overall rating of D, which translates to Sell. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
INTU has an A grade for Sentiment, which is consistent with analysts’ expectations that its EPS will increase significantly in the coming months. In comparison, MDB has a C grade for Sentiment, which is consistent with analysts’ expectations that its EPS will decline in the near term.
Moreover, INTU has an A grade for Quality. This is justified given INTU’s 0.84% trailing-12-month asset turnover ratio, which is 31.8% higher than the 0.64% industry average. MDB has a Quality grade of C, which is in sync with its 0.39% trailing-12-month asset turnover ratio, which is 39.4% lower than the 0.64% industry average.
Of the 168 stocks in the Software – Application industry, INTU is ranked #23, while MDB is ranked #134.
Rapid digital transformation and increasing cloud demand are expected to drive the enterprise software market’s growth for an extended period. So, both INTU and MDB are expected to benefit. However, we think it is better to bet on INTU now because of its superior financials, lower valuation, and higher profitability.
Our research shows that odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the other top-rated stocks in the Software – Application industry here.
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INTU shares were trading at $688.43 per share on Friday morning, up $4.43 (+0.65%). Year-to-date, INTU has gained 82.46%, versus a 24.99% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...
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