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What's in the Offing for Intuit (INTU) This Earnings Season?

Zacks Equity Research
·4 min read

Intuit Inc. INTU is scheduled to release first-quarter fiscal 2021 results on Nov 19.

The company had not issued any guidance for the fiscal first quarter. However, during its last quarterly results, Intuit had projected three scenarios for fiscal 2021 — economic recovery at the current pace, a W-shaped economic recovery, and a double W-shaped recovery. Moreover, it expects sluggish Small Business and Self-Employed revenue growth in the first half of fiscal 2021 compared with the second half.

The Zacks Consensus Estimate for fiscal first-quarter revenues is pinned at $1.20 billion, calling for a 3.3% year-over-year increase. The consensus mark for earnings is pegged at 38 cents per share, suggesting a decline of 7.3% from the year-ago quarter’s earnings 41 cents.

Intuit’s earnings beat estimates in each of the trailing four quarters, the average beat being 30.4%.

Let’s see how things have shaped up prior to the upcoming announcement.

Factors at Play

Intuit’s top line is likely to have been driven by solid growth in the Online Ecosystem, aided by an expanding subscriber base for Quickbooks Online.

Intuit Inc. Price and Consensus

Intuit Inc. Price and Consensus
Intuit Inc. Price and Consensus

Intuit Inc. price-consensus-chart | Intuit Inc. Quote

Notably, the Zacks Consensus Estimate for total Online Ecosystem revenues is pegged at $577 million for the quarter under review, indicating a 15.2% jump from the prior-year quarter.  The consensus mark for QuickbooksOnline’s revenues is pinned at $362 million, suggesting an 18.3% jump, year on year.

Furthermore, growth in the TurboTax Live offering is likely to have been accretive to the Consumer tax business during the fiscal first quarter, driven by growing customer engagement. The Zacks Consensus Estimate for revenues of $108 million from the Consumer tax business calls for growth of 8% year over year.

Solid momentum of the company’s lending product, QuickBooks Capital, is a positive as well.

However, about 25% of the company’s Online Services unit, which includes non-integrated payroll and payment offerings, is not performing well, causing a deceleration in the rate of growth. This is expected to have been a headwind for the top line during the fiscal first quarter.

Besides, management expects its Desktop Ecosystem to display a gradual decline. The consensus mark for Desktop Ecosystem revenues is pegged at $500 million, calling for an 8.3% decline year over year.

Nonetheless, inflated costs and expenses due to higher investments in engineering and marketing might have hurt Intuit’s profitability during the quarter under review.

What Our Model Says

Our proven model does not predict an earnings beat for Intuit this season. The combination of a positive Earnings ESP, and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

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

Stocks With Favorable Combinations

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:

Target Corporation TGT has an Earnings ESP of +7.75% and holds a Zacks Rank of 2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

NetApp, Inc. NTAP has an Earnings ESP of +2.78% and carries a Zacks Rank of 3, currently.

DocuSign DOCU has an Earnings ESP of +4.35% and currently holds a Zacks Rank of 3.

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