Intuit (INTU) to Report Q3 Earnings: What's in the Cards?

Intuit Inc. INTU is scheduled to release third-quarter fiscal 2020 results on May 21.

The company expects revenues of $2.99-$3 billion, suggesting an 11-13% year-over-year increase. The Zacks Consensus Estimate is pegged at $3.12 billion, implying a 4.64% decline from the year-ago quarter’s reported figure.

Intuit anticipates non-GAAP earnings of $4.46-$4.49 per share. The consensus mark for the same is pegged at $5.24 per share, indicating a year-over-year decrease of 5.59%.

Its earnings beat estimates in the trailing four quarters, the average positive surprise being 27.53%.

Intuit Inc. Price and EPS Surprise

Intuit Inc. Price and EPS Surprise

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

Factors at Play

Intuit’s third-quarter fiscal 2020 earnings are likely to have been driven by solid growth in the Online Ecosystem, aided by an expanding subscriber base for Quickbooks Online. The company expects Online Ecosystem revenue growth of about 27% for the fiscal third quarter. The Zacks Consensus Estimate of $571 million for revenues from Online suggests a 30.1% increase from the year-ago quarter’s reported number. This is expected to have driven Small Business and Self-Employed Group revenues by approximately 10% in the fiscal third quarter ($975-$980 million).

Notably, the Zacks Consensus Estimate for Quickbooks Online’s revenues is pegged at $341 million for the fiscal third quarter, suggesting a 31.2% rise from the prior-year quarter’s number.

As mentioned by the company in its latest guidance update, based on the latest IRS data, the DIY category is performing notably better than the assisted category. Also, TurboTax Online share is within the company’s expectations, which is a positive.

However, the shift of tax filing deadline to Jul 15 due to disruptions related to the coronavirus pandemic pushed most of the revenues to the fiscal fourth quarter and led the company to reduce its revenue guidance for the fiscal third quarter from $7.44-$7.54 billion expected earlier. Moreover, the guidance for non-GAAP operating income and earnings was reduced from $2.02-$2.04 billion and $5.90-$5.95 per share to $1.53-$1.54 billion and $4.46-$4.49, respectively.

Also, the company anticipates most of its customers with complex returns to start filing toward the deadline, which might result in an approximately 15% year-over-year decline in Consumer Group revenues in the fiscal third quarter.

What Our Model Says

The proven Zacks model does not conclusively predict an earnings beat for Intuit this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. 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 has an Earnings ESP of -9.28% and a Zacks Rank #3.

Stocks to Consider

Here are a few stocks you may consider, as our model shows that these have the right combination of elements to beat on earnings this season:

Adamas Pharmaceuticals Inc. ADMS has an Earnings ESP of +4.86% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

NVIDIA Corporation NVDA has an Earnings ESP of +0.15% and a Zacks Rank of 2.

Cisco Systems Inc. CSCO has an Earnings ESP of +6.29% and a Zacks Rank #3.

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