Intuit and Tronox Holdings have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – August 1, 2023 – Zacks Equity Research shares Intuit Inc.'s (INTU) as the Bull of the Day and Tronox Holdings plc TROX asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Walmart Inc. WMT, Abercrombie & Fitch ANF and Ross Stores ROST.
Here is a synopsis of all five stocks:
Bull of the Day:
Intuit Inc.'s portfolio of tax-focused software transformed the company into a Wall Street giant. The firm behind TurboTax and other financial services then spent the covid boom adding to its portfolio and diversifying into email marketing and beyond.
INTU shares have surged 30% YTD and they just hit new 52-week highs on July 31. Yet, Intuit still trades roughly 25% below its all-time highs and its growth outlook remains solid and steady, driven by the never-ending need for digital tax help and other various software in our digital-everything world.
Intuit's pitch is simple enough: Software and taxes are here to stay no matter what the future holds.
Software Everyone Needs & More
Intuit might be best known for TurboTax, but it is much more than an online tax company. Intuit sells software geared toward accounting, small business money management, and more, including QuickBooks and Mint.
Intuit bought Credit Karma in December 2020 and Mailchimp in November 2021. Alongside TurboTax, accounting, and other financial services, Inuit now provides email marketing, digital-ad services, customer-relationship-management tools, credit scores, and other personal financial services.
Intuit boasts over 100 customers worldwide, and it grew its revenue between 11% and 32% for seven years running—the 32% came in fiscal 2022 (up 24% excluding Mailchimp). INTU has expanded its sales from under $4 billion in fiscal 2013 to $12.73 billion in FY22 (period ended on July 31, 2022).
Intuit also managed to post a nice string of big bottom-line growth for an extended period of time. Most recently, the tech firm beat our Q3 FY23 EPS estimate in late May and raised its full-year guidance.
Near-Term Outlook
Intuit's FY23 revenue (period ended on July 31) is projected to climb by over 12% to jump from $12.73 billion to $14.30 billion, based on the most recent Zacks data. Meanwhile, its adjusted earnings are projected to soar 20% YoY to $14.22 a share. INTU's Q4 sales are set to pop by 9.4% to boost its earnings by 25%.
Peeking ahead to INTU's fiscal 2024, the company is projected to post 11% higher revenue and 9% stronger adjusted earnings. Intuit has topped our quarterly EPS estimates by an average of 28% in the trailing four quarters, with only one bottom line miss in the past five years. And its positive earnings revisions help Intuit land a Zacks Rank #1 (Strong Buy) right now.
Performance and Valuation
Intuit stock has skyrocketed roughly 2,100% over the last 20 years to blow away the Zacks tech sector's 515%. INTU also more than doubled the tech space during the trailing decade, soaring 700%. The tax software stock continued its outperformance over the past three years as well, up 64% vs. 35%.
The stock's significant outperformance came even though it has roughly matched the tech space over the last two years, with INTU down around 4%. Intuit has, however, lagged the broader Zacks tech sector so far this year, up 31% vs. 43%. Thankfully, INTU has picked up some momentum recently, surging 13% in the last month to hit new 52-week highs on the last day of July.
Despite the climb, Intuit still trades roughly 25% below its all-time highs. Plus, INTU trades solidly above its 21-day, 50-day, and 200-day moving averages. The stock also jumped back above its 50-week moving average earlier this year, following its 2022 tumble and it found support there in early June.
Intuit is hardly a value stock, trading at 50.1X forward 12-month earnings. But this marks a 40% discount to its own 10-year highs. The stock's PEG ratio, which factors in its growth outlook, also showcases around 40% value vs. its decade-long high at 3.3.
Bottom Line
Intuit's balance sheet is solid even though it made two big acquisitions over the last several years. The company also pays a dividend (yielding 0.6% right now) that it has raised by 14% annualized over the last five years. And the company has $2 billion remaining on its current share repurchase program.
Wall Street is high on the stock, with 19 of the 22 brokerage recommendations Zacks has for Intuit sitting at "Strong Buys." This makes sense given INTU's long history of growth in a critical, hard-to-cut-back-on area such as taxes, coupled with its expansion into new areas of business and personal finance software.
Intuit is set to release its Q4 and full-year fiscal 2023 financial results on August 24.
Bear of the Day:
Tronox Holdings plc. is one of the leading producers of high-quality titanium products. Tronox's earnings outlook started fading quickly last year.
Tronox fell short of our second quarter earnings estimates by a wide margin on July 26. TROX's EPS outlook has slipped even further since its big miss and disappointing outlook.
The Tronox Basics
Tronox mines and processes titanium ore, zircon, and other minerals. Tronox also manufactures titanium dioxide pigments that help add brightness and durability to paints, plastics, paper, and other everyday products.
Tronox capped off a nice stretch of revenue growth between fiscal 2017 and 2021, with 30% sales expansion in FY21. Tronox's revenue then slipped 3% YoY in 2022 against that tough to compete-against-stretch. Tronox on July 26 fell short of both our adjusted earnings and revenue estimates for Q2 FY23.
The firm's adjusted Q2 earnings tumbled 81% YoY to $0.16 a share, which missed our estimate by 41%. Tronox's earnings outlook took another hit following its release.
Zacks estimates currently call for TROX's sales to slide 8.7% in FY23. Meanwhile, its adjusted earnings are projected to fall 47% YoY in 2023.
TROX's FY23 consensus estimate has dropped 27% over the last two months, with FY24's estimate 19% lower. And its most recent/most accurate estimates came in far lower. Tronox's downward earnings revisions help it land a Zacks Rank #5 (Strong Sell) right now.
Bottom Line
Tronox stock is down roughly 40% over the last decade vs. the Zacks Basic Materials sector's 22% climb. This run included some huge swings, with TROX shares down roughly 45% from their 2021 highs.
TROX stock has fallen 3% in 2023, including a significant fall since its Q2 release to take it back under its 21-day moving average. Tronox shares also slipped back below their 50-week moving average after being rejected by their 200-week not too long ago.
Tronox is part of the Chemical – Diversified industry that currently ranks in the bottom 12% of over 250 Zacks industries. And it might be best for investors to stay away from Tronox at the moment and look elsewhere for winners.
Additional content:
Walmart's (WMT) Additional Stake in Flipkart to Fuel e-Commerce?
Walmart Inc. has been making successive efforts to strengthen its e-commerce operations in the United States and internationally. The omnichannel retailer, which had invested in Flipkart in 2018, has acquired Tiger Global's stake in the abovementioned Indian e-commerce platform, as revealed by sources.
Apparently, Walmart has paid $1.4 billion for Tiger Global's stake in Flipkart, valuing Flipkart at $35 billion. The move underscores Walmart's confidence in the prospects of Flipkart as well as the Indian market.
In the first quarter of fiscal 2024, Walmart's International segment net sales grew 12.9% at constant currency, driven by double-digit growth in Flipkart, Walmex and China. Segment e-commerce sales jumped 25% on store-fulfilled and advertising strength. On its first-quarter earnings call, management stated that both Flipkart and PhonePe were doing well, keeping WMT encouraged about opportunities in the Indian market.
Want to Know More?
Walmart's e-commerce business and omnichannel penetration have been increasing. This Zacks Rank #2 (Buy) company's global e-commerce sales form more than 13% of its sales as of the end of fiscal 2023. Walmart has been taking several e-commerce initiatives, including buyouts, alliances, and improved delivery and payment systems.
The company is innovating in the supply chain and adding capacity and building businesses, such as Walmart GoLocal, Walmart Connect, Walmart Luminate, Walmart+, Spark Delivery, Marketplace and Walmart Fulfillment Services. In the first quarter of fiscal 2024, e-commerce sales surged 26% globally on omnichannel strength, including pickup and delivery.
Moreover, U.S. e-commerce sales rose 27%, driven by strength in pickup & delivery and advertising. At Sam's Club, e-commerce sales jumped 19% on strong curbside performances.
Walmart's other notable strides include the acquisition of Zeekit, which is focused on uniting fashion and technology via its virtual fitting room platform. Apart from this, the company's investment in Ninjacart, contracts with Symbotic, Shopify, Green Dot and Microsoft and the buyouts of ShoeBuy, Moosejaw and Bonobos, among others, underscore its digital efforts. Additionally, WMT is making aggressive efforts to expand in the booming online grocery space, which has long been a major contributor to e-commerce sales.
Walmart has taken robust strides to strengthen its delivery arm, as evidenced by its partnership with Salesforce, the expansion of the InHome delivery service, investments in DroneUp, a pilot with HomeValet, the introduction of Carrier Pickup by FedEx, the launch of the Walmart+ membership program, drone delivery pilots in the United States with Flytrex and Zipline, and a pilot with Cruise to test grocery delivery through self-driven all-electric cars.
Prior to this, Walmart unveiled Express Delivery and joined forces with Point Pickup, Roadie and Postmates, alongside acquiring Parcel to enhance its delivery service. Furthermore, the company's store and curbside pickup options add to customers' convenience. As of the first quarter of fiscal 2024, Walmart U.S. had 4,600 pickup locations and more than 3,900 same-day delivery stores.
Walmart's increased stake in Flipkart is likely to further bolster the former's e-commerce business. Shares of this supermarket giant have rallied 11.1% in the past six months compared with the industry's growth of 10.6%.
Other Promising Stocks
Abercrombie & Fitch, which operates as a specialty retailer, currently sports a Zacks Rank #1 (Strong Buy). ANF has a trailing four-quarter earnings surprise of 480.6%, on average. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Abercrombie & Fitch's current fiscal-year EPS suggests a considerable increase from the year-ago reported number.
Ross Stores, an off-price retailer, currently carries a Zacks Rank #2. ROST has a trailing four-quarter earnings surprise of 11.5%, on average.
The Zacks Consensus Estimate for Ross Stores' current fiscal-year earnings suggests growth of 12.6% from the year-ago reported figure.
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Walmart Inc. (WMT) : Free Stock Analysis Report
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Intuit Inc. (INTU) : Free Stock Analysis Report
Tronox Holdings PLC (TROX) : Free Stock Analysis Report
