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Intuit (INTU) to Report Q1 Earnings: What Lies in Store?

Zacks Equity Research

Intuit Inc. INTU is scheduled to release first-quarter fiscal 2020 results on Nov 21.

The company expects revenues of $1.12-$1.13 billion, up 10-12% year over year. The Zacks Consensus Estimate is pegged at $1.12 billion, implying 10.6% jump from the year-ago reported figure.

Intuit anticipates non-GAAP earnings in the band of 23-25 cents per share. The consensus estimate for the same is pegged at 26 cents, indicating a decline of 10.3%.

Its earnings beat estimates in all the trailing four quarters, the average being 54.7%.

Intuit Inc. Price and EPS Surprise

 

Intuit Inc. Price and EPS Surprise

Intuit Inc. price-eps-surprise | Intuit Inc. Quote

 

Intuit’s revenues in the fourth quarter of fiscal 2019 grossed $994 million, up 15% year over year, topping the Zacks Consensus Estimate by 3.4%.

The company reported non-GAAP loss of 9 cents per share, narrower than the Zacks Consensus Estimate of loss of 14 cents.

Factors at Play

Intuit’s first-quarter fiscal 2020 earnings are likely to have been driven by solid growth in the Online Ecosystem. Intuit expects Online Ecosystem revenues to grow more than 30% in the fiscal first quarter and the following quarters. Growing Quickbooks Online subscriber base and focus on additional online services are likely to have boosted revenues from Online Ecosystem.

The Zacks Consensus Estimate for total Online Ecosystem revenues is pegged at $487 million for the quarter, indicating a 31.3% surge from the prior-year number.  The consensus mark for Quickbooks Online’s revenues is pegged at $288 million, suggesting a 32.7% rise from the prior-year number.

Furthermore, growth in the TurboTax Live offering is likely to have been accretive to the Consumer tax business in the fiscal first quarter, as suggested by the company in fourth-quarter fiscal 2019 earnings call. The Zacks Consensus Estimate for revenues of $95 million from the Consumer Tax business indicates growth of 5.56% year over year.

Solid momentum from the company’s lending product QuickBooks Capital is a positive as well. Additionally, we are optimistic about the growing traction of the company’s QuickBooks Online Advanced solution, which is targeting the midmarket.

However, the fiscal first quarter is traditionally a slow quarter for Intuit. This is because the profitable tax season covers the fiscal second and third quarters every year. Therefore, seasonality is expected to have been a headwind for the company’s top line in the to-be-reported quarter.

Also, increase in QuickBooks Online subscribers is expected to have been moderate. The Zacks Consensus Estimate of 4,680 for Quickbooks Online subscribers suggests 30.4% increase from year-ago reported number. This is lower than the 32.9% surge in the last reported quarter.

Slow growth in the PC market is expected to have weighed on the Desktop ecosystem revenues. The Zacks Consensus Estimate for revenues for the segment stands at $533 million, indicating 0.74% decline.

What Does the Zacks Model Say

The proven Zacks model does not conclusively predict an earnings beat for Intuit this time around. The combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Intuit has a Zacks Rank #3 and an Earnings ESP of 0.00%.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Following are a few stocks worth considering with the right mix of elements to beat estimates this time:

Golar LNG Limited GLNG has an Earnings ESP of +16.52% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Burlington Stores, Inc. BURL has an Earnings ESP of +2.75% and a Zacks Rank of 2.

Momo Inc. MOMO has an Earnings ESP of +3.94% and is Zacks #3 Ranked.

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