Which Stocks Look Ready to Pop and Drop with Earnings This Week?

Indie Research

Stocks tend to be most volatile around earnings season, when a good or bad report can make or break it. However, a good or even great earnings report doesn't necessarily translate into a huge pop for a stock.

During earnings season, BullMarket.com publishes a comprehensive 20- to 30-page Earnings Preview report for the week ahead each Friday.

Over the past two years, BullMarket.com used the data it has collected to correctly predict investor reactions for nearly two-third of the stocks it's previewed.

In its latest earnings preview, BullMarket.com looks at several popular stocks, including Groupon (GRPN - News), Target (TGT - News), Deere (DE - News), Home Depot (HD - News), Wal-Mart (WMT - News), Intuit (INTU - News), Dollar Tree (DLTR - News), and Salesforce.com (CRM - News).

Here is just a tiny sample of what BullMarket.com wrote about Home Intuit:

Intuit is a financial software firm that markets to small- and medium-sized businesses, consumers, accounting professionals, and financial institutions in the U.S., Canada, and the U.K. The company's brands include Quicken, QuickBooks, TurboTax, Lacerte, and Digital Insight. ...

Last quarter, the company reported a fiscal second-quarter profit of $118 million, or 39 cents per share, up from $73 million, or 23 cents per share, a year earlier.

On an adjusted basis, Intuit earned 51 cents a share. Revenue rose to $1.02 billion from $878 million.

Analysts had expected a profit of 45 cents per share on $1.01 billion in revenue. Small Business Group revenue grew 9% for the quarter. Within Small Business, Financial Management Solutions revenue grew 6%, which compares to growth of 21% in last year's second quarter. Last year Intuit benefited from a price increase for QuickBooks Pro and accelerating growth in QuickBooks Online and Enterprise Solutions.

Employee Management Solutions revenue grew 9% for the quarter. Online Payroll subscribers grew 22%. Payment Solutions revenue grew 17% in the second quarter. Revenue growth was fairly balanced between total payments volume growth, which was up 10%, and adjustments in rates and fees, the company said. The total number of merchants grew by 11%.

Consumer Tax revenue totaled $295 million in the second quarter, up 44% versus the second quarter of fiscal 2011. The IRS was unable to accept certain returns until mid-February last year, which contributed to a year-over-year decline in Consumer Tax revenue in the 2011 period.

Accounting Professionals segment revenue grew by 8% in the second quarter. Intuit said its renewal rates remained strong.

The Financial Services segment grew revenue 9%. Internet banking end users grew by 3%, and bill-pay end users grew by 9%. Intuit said its growth in this business was driven by ongoing adoption of its online and mobile banking capabilities, with mobile users nearly tripling over the last year to 1.6 million.

For the current quarter, Intuit forecast EPS of $2.47-$2.51 compared to the $2.49 consensus. For the full year, Intuit expects EPS of $2.90-$2.97 on revenue growth of 9-11%, implying revenue of $4.185-$4.285 billion. ...

Intuit has beaten the EPS consensus seven of the past eight quarters, meeting estimates once. Over that period, the stock has risen the next session six of eight quarters. Seasonally, the stock has risen three times in the past four years. ...

Outside of earnings, we like Intuit's strong position in the economically insensitive tax software preparation business via Turbo Tax, although this has become more of a strong cash cow than a big growth driver. The bigger growth driver for the company is its more economically sensitive businesses tied to small business activity such as Quickbooks, Intuit Payroll, and other offerings.

The company is moving more towards a software-as-a-service (SaaS) model, which should help spur growth moving forward. Mint.com, which the company acquired toward the end of 2009, has some intriguing longer-term potential.

More recently, Intuit announced it would acquire Demandforce to enter the online marketing space. The move should help it become a one-stop shop for small business, allowing it to meet their front and back office needs. Given its huge Quickbooks install base, it should have plenty of opportunity to cross-sell this new offering. ...

The full BullMarket.com earnings analysis includes a look at historical earnings data and EPS trends for the companies above and more; examines past investor reactions to earnings in various contexts; gives options activity analysis; reviews previous-quarter earnings; and gives an opinion on both what earnings will look like and how investors will react based on the aforementioned data points.

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