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Intuit (INTU) to Report Q4 Earnings: Is a Beat in the Cards?

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Intuit (INTU) to Report Q4 Earnings: Is a Beat in the Cards?

Intuit's (INTU) fiscal Q4 results are likely to benefit from growing QuickBooks subscriber base and TurboTax Live offering.

Intuit Inc. INTU is scheduled to report fourth-quarter fiscal 2018 results on Aug 23.

Notably, the company beat estimates in each of the trailing four quarters, delivering an average positive surprise of 37.79%.

In the last reported quarter, the company came up with a positive earnings surprise of 3.21%.

For the upcoming quarterly results, the company expects revenues in the range $940-$960 million and earnings per share between 22 cents and 24 cents.

Let's see how things are shaping up for the upcoming announcement.

Intuit Inc. Price and Consensus

Intuit Inc. Price and Consensus | Intuit Inc. Quote

Factors Likely to Drive Results

Intuit is benefiting from regular enhancements of the solutions portfolio via innovations and inorganic growth, which is boosting its top line. The company is trying to shift its business model from selling software to cloud-based subscription providers, and is gradually moving to Amazon Web Services to accelerate developer productivity.

We note that, Intuit has been witnessing solid year-over-year growth for the past several quarters in its QuickBooks subscriber base, which is driving Small Business segment revenues. This is likely to remain a tailwind as the company expects an increase in QuickBooks online subscriber base in the full fiscal.

The Zacks Consensus Estimate for Quickbook’s Online subscriber base for the fiscal fourth quarter is pegged at 3.376 million, marking 41.7% year-over-year improvement.

Additionally, the company’s TurboTax Live offering, which witnessed success in its first season is likely to be accretive to its Consumer business in the to-be-reported quarter as well. Intuit is expected to benefit from the growing adoption of the new Turbo offering launched in May that provides a snapshot of the user’s household income.

Furthermore, strong performance of the DIY category and higher average revenue per return are expected to be tailwinds.

Nonetheless, Intuit’s high costs and expenses keep margins under pressure. The company’s third-quarter fiscal 2018 non-GAAP operating margin contracted 120 basis points year over year. This makes us slightly cautious about the to-be-reported quarter’s bottom-line results.

Moreover, stiff competition from payroll solution providers such as Paycom Software and Automatic Data Processing remains a headwind.

What the Zacks Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Sell-rated stocks (Zacks Rank #4 or 5) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Intuit has a Zacks Rank #3 and an Earnings ESP of +3.45%.

Other Stocks to Consider

Here are some other stocks that you may consider as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:

Splunk Inc. SPLK with an Earnings ESP of +57.41% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Hewlett Packard Enterprise Company HPE with an Earnings ESP of +3.65% and a Zacks Rank #3.

HP Inc. HPQ has an Earnings ESP of +1.19% and carries a Zacks Rank #3.

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