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Will Intuit (INTU) Surprise Estimates in Q1 Earnings Release?

Intuit Inc.INTU is expected to report first-quarter fiscal 2016 results on Nov 19. Last quarter, the company posted a positive earnings surprise of 8%. Let us see how things are shaping up for this announcement.

Factors to Consider

Intuit concluded fiscal 2015 on a dismal note. Although revenues grew on a year-over-year basis, its loss widened.

Nevertheless, we are positive on Intuit's growing SMB exposure and believe that the strategic acquisitions will boost the segment. The increased adoption of its cloud-based services and products is another positive.

Intuit has also restructured its business to focus more on QuickBooks services. The company expects to continue to invest in the portfolio, which is likely to impact its near-term profitability.

Moreover, rising competition from payroll solution providers such as Paychex Inc. and Automatic Data Processing ADP is a concern, in our view, especially considering the seasonality of Intuit's tax business and the ongoing economic uncertainty.

Earnings Whispers

Our proven model does not conclusively show that Intuit will beat earnings this quarter. This 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 20 cents. Hence, the difference is 0.00%.

Zacks Rank: Intuit's Zacks Rank #3 (Hold) increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

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

Stocks to Consider

Here are some companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat in their upcoming releases:

Seadrill Partners LLC SDLP with Earnings ESP of +12.00% and a Zacks Rank #1 (Strong Buy)

TiVo Inc. TIVO with Earnings ESP of +12.50% 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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