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Intuit (INTU) Surges 72% YTD: Will the Rise Continue in 2022?

Intuit INTU stock has outperformed the Zacks Computer – Software industry as well as S&P 500 year to date (YTD). The stock has surged 71.8% so far this year, while the Computer – Software and benchmark index have increased 38.1% and 26.9%, respectively.

The stock’s price rally reflects the company’s robust fundamentals. Therefore, if you haven’t taken advantage of the share-price appreciation yet, it’s time for you to add the stock to your portfolio now.

The company has performed brilliantly so far this year and has the potential to carry on the momentum in 2022 as well.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

What’s Driving Intuit Stock’s Growth?

Intuit benefits from strong demand for its tax products, an improvement in the customer retention rates and an expansion in the subscriber base.

The space, in which INTU operates, has huge growth opportunity. There are more than 29 million small and medium businesses in the United States alone. Moreover, Intuit, with its QuickBooks Online Advanced solution, is now targeting the mid-market. Furthermore, the number of individuals preferring to file their income tax themselves is increasing rapidly, thereby widening the scope for Intuit’s TurboTax software.

In addition, the company’s strategy of shifting its business to the cloud-based subscription model will help generate stable revenues over the long run. Cloud-based solutions, as against software-based ones, have gained popularity as they offer access anywhere anytime. The Cloud is part of the technology space and has been gaining momentum in recent years. It is a process that stores data or software outside of a computer, which are accessible anywhere anytime via the Internet. This revolutionary idea can lower IT costs of companies by cutting down the need for servers and staff.

Furthermore, over the last few years, Intuit has divested some of its non-core businesses, including Quicken, QuickBase and Demandforce, to focus more on its core tax and accounting businesses. Intuit’s initiatives have provided it the much-needed funds to invest in and focus more on the fast-growing online businesses. The company looks forward to add more recurring revenues within its Consumer Tax and Small Business segments, thereby capitalizing on the ongoing shift toward digital solutions. Intuit’s efforts to convert itself into a cloud-based tax and accounting solution provider are encouraging.

Last year’s Credit Karma acquisition has expanded Intuit’s customer base by adding 110 million Credit Karma customers to its existing 57-million user base. With this acquisition, Intuit will help its customers better manage their personal finance requirements. Credit Karma contributed $418 million to INTU’s first-quarter fiscal 2022 total revenues.

Solid Growth Expectations

The Zacks Consensus Estimate of $11.66 per share for fiscal 2022 earnings suggests growth of approximately 20% from the year-ago period. The long-term earnings per share growth rate is estimated at 15.7%.

Intuit has an impressive earnings surprise history. The company has outpaced the estimates in all the trailing four quarters, delivering an average earnings surprise of 20.9%.

Analysts have raised the estimates for fiscal 2022 and 2023 over the past seven days, reflecting their confidence in the company. During the same period, the Zacks Consensus Estimate for fiscal 2022 and 2023 has moved four cents and six cents north, respectively.

Zacks Rank and Stocks to Consider

Currently, Intuit carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader technology sector include Google-parent Alphabet GOOGL, Diodes DIOD and PTC Inc. PTC, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Alphabet’s fourth-quarter 2021 earnings has been revised downward by a penny to $26.71 per share over the past 30 days. For 2021, earnings estimates have moved upward by 43 cents to $108.29 per share in the past 30 days.

Alphabet’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 41.5%. GOOGL stock has rallied 68.8% YTD.

The Zacks Consensus Estimate for Diodes’ fourth-quarter 2021 earnings has been revised upward by 23.9% to $1.45 per share over the past 60 days. For 2021, earnings estimates have moved upward by 6.3% to $5.06 per share over the past 60 days.

Diodes’ earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 10%. Shares of DIOD have rallied 59.5% YTD.

The consensus mark for PTC’s first-quarter fiscal 2022 earnings has been revised upward to $1.00 per share from 90 cents 60 days ago. For fiscal 2022, earnings estimates have been revised upward by 27 cents to $4.19 per share in the past 60 days.

PTC’s earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while missing the same on one occasion, the average surprise being 47.8%. Shares of PTC have increased 2.5% YTD.

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Intuit Inc. (INTU) : Free Stock Analysis Report

Diodes Incorporated (DIOD) : Free Stock Analysis Report

Alphabet Inc. (GOOGL) : Free Stock Analysis Report

PTC Inc. (PTC) : Free Stock Analysis Report

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