CWCO vs. GWRS: Which Stock Should Value Investors Buy Now?
Have you been paying attention to shares of Intuit INTU? Shares have been on the move with the stock up 10.2% over the past month. INTU hit a new 52-week high of $210.13 in the previous session. Intuit has gained 32.5% since the start of the year compared to the 9.8% move for the Computer and Technology sector and the 18.3% year-to-date return for its peer group.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, having beaten the Zacks Consensus Estimate in each of the last four quarters. In its last earnings report on May 22, 2018, Intuit reported EPS of $4.82 versus the Zacks Consensus Estimate of $4.67 while it beat the consensus revenue estimate by 2.91%.
For the current fiscal year, Intuit is expected to post earnings of $5.53 per share on $5.93 billion in revenues. This represents a 25.4% change in EPS on a 14.51% change in revenues. For the next fiscal year, the company is expected to earn $6.52 per share on $6.51 billion in revenues. This represents a year-over-year change of 17.96% and 9.88%, respectively.
Intuit may be at a 52-week high right now, but what might the future hold for INTU? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Intuit has a Value Score of D. The stock's Growth and Momentum Scores are A and B, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 37.8X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 44X versus its peer group's average of 25.6X. Additionally, the stock has a PEG ratio of 2.33. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Intuit Inc. Price and Consensus
Intuit Inc. Price and Consensus | Intuit Inc. Quote
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Intuit currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 and Style Scores of A or B, it looks as if Intuit passes the test. Thus, it seems as though INTU shares could still be poised for more gains ahead.
How Does Intuit Stack Up to the Competition?
Shares of Intuit have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also looking good, including Sapiens International Corporation N.V. SPNS, Verint Systems VRNT, and Citrix Systems CTXS, all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 19% of all the industries we have in our universe, so it looks like there are some nice tailwinds for INTU, even beyond its own solid fundamental situation.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Intuit Inc. (INTU) : Free Stock Analysis Report
Citrix Systems, Inc. (CTXS) : Free Stock Analysis Report
Verint Systems Inc. (VRNT) : Free Stock Analysis Report
Sapiens International Corporation N.V. (SPNS) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research