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Was Intuit Inc’s (NASDAQ:INTU) Earnings Growth Better Than The Industry’s?

In this commentary, I will examine Intuit Inc’s (NASDAQ:INTU) latest earnings update (31 January 2018) and compare these figures against its performance over the past couple of years, as well as how the rest of the software industry performed. As an investor, I find it beneficial to assess INTU’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. Check out our latest analysis for Intuit

Could INTU beat the long-term trend and outperform its industry?

I like to use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This technique enables me to analyze various companies on a similar basis, using the latest information. For Intuit, its most recent bottom-line (trailing twelve month) is US$950.00M, which compared to the prior year’s level, has risen by 20.10%. Given that these values may be somewhat short-term thinking, I have calculated an annualized five-year value for Intuit’s net income, which stands at US$757.22M This suggests that, generally, Intuit has been able to steadily raise its bottom line over the past few years as well.

NasdaqGS:INTU Income Statement May 22nd 18
NasdaqGS:INTU Income Statement May 22nd 18

How has it been able to do this? Well, let’s take a look at whether it is only owing to industry tailwinds, or if Intuit has experienced some company-specific growth. The ascend in earnings seems to be bolstered by a strong top-line increase outpacing its growth rate of costs. Though this has led to a margin contraction, it has made Intuit more profitable. Looking at growth from a sector-level, the US software industry has been growing its average earnings by double-digit 12.76% over the previous year, and 12.89% over the previous five years. This suggests that any tailwind the industry is benefiting from, Intuit is capable of leveraging this to its advantage.

What does this mean?

Intuit’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as Intuit gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Intuit to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for INTU’s future growth? Take a look at our free research report of analyst consensus for INTU’s outlook.

  2. Financial Health: Is INTU’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.

  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 31 January 2018. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.

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