Can Intuit Inc. (INTU) Surprise this Earnings Season? - Analyst Blog

Intuit Inc. ( INTU ) is set to report fourth-quarter fiscal 2014 results on Aug 21. Last quarter, the company posted a negative earnings surprise of 2.3%. Moreover, it is worth noting that Intuit has underperformed the Zacks Consensus Estimate in three out of the four preceding quarters with a negative earnings surprise average of 153.6%.

Let us see how things are shaping up for this announcement.

Factors this Past Quarter

Intuit reported mixed third-quarter fiscal 2014 results, with earnings missing the Zacks Consensus Estimate while revenues beat the same. However, year-over-year comparisons were favorable due to a strong tax season and robust customer additions.

We are positive on Intuit's growing SMB exposure and believe that the strategic acquisitions will continue to support the segment. The higher adoption rate of its cloud-based services and products is another positive factor. Also, the company's share buyback program would aid the bottom line.

Recently, Intuit completed the acquisition of Check Inc., a mobile bill payment start-up. Check will be integrated into Intuit's Consumer Ecosystem Group. We believe that the acquisition will help Intuit to provide value added services to its customers, thereby increasing its customer base going forward.

Nevertheless, competition from other payroll solution providers such as Paychex Inc. ( PAYX ) and Automatic Data Processing, seasonality of Intuit's tax business and the ongoing uncertainty in the economy concern us.

Earnings Whispers?

Our proven model does not conclusively show that Intuit will beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 5 cents. Hence, the difference is 0.00%.

Zacks Rank: Intuit's Zacks Rank #3 (Hold) when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Abercrombie & Fitch Co. ( ANF ), with Earnings ESP of +20.00% and a Zacks Rank #2 (Buy)

Dollar Tree, Inc. ( DLTR ), with Earnings ESP of +7.69% and a Zacks Rank #3

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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