Intuit Earnings Preview: EPS and Sales Expect to Be Up About 6%
Intuit (NASDAQ: INTU), which is well positioned to take advantage of the migration of small business to the cloud, is scheduled to report fiscal third-quarter 2012 results tomorrow, May 17, after the end of the trading day.
The software provider has enjoyed double-digit year-over-year percentage revenue growth for the past four quarters. And some forecasts have double-digit year-over-year percentage earnings growth in each year over the next three years. Though analysts' EPS estimates for the most recent quarter have slipped over the past month, analysts on average recommend buying shares.
Analysts predict that Intuit will report per-share earnings of $2.48 for the quarter and say that its revenue totaled $1.96 billion. That would be up from $2.33 per share and $1.85 billion in sales in the same period of last year. Note that the EPS estimate is a penny less that it was 60 days ago. And Intuit's EPS results have not fallen short of analysts' consensus estimates in the past 10 quarters. The positive surprise in the second quarter was six cents a share, or 13.3%.
Back in that second-quarter report, the company said its profit rose 61.6% year over year to $118 million or $0.39 per share. Revenue was 16.1% to $1.02 billion, which also surpassed consensus expectations. Intuit said small businesses benefited from an improving economy and consumer tax revenue for the company's software was strong for the first month of the 2011 tax season. The company also raised its annual earnings forecast to $2.90 to $2.97 per share, compared to the $2.90 per share Wall Street view.
The full-year forecast now has EPS up 14.9% from the previous year to $2.95, as well as revenue 9.7% higher to $4.2 billion. And analysts so far expect to see year-over-year growth of both per-share earnings and revenues for the fourth quarter.
Intuit provides business and financial management solutions for small and medium-sized businesses, financial institutions, accounting professionals and consumers, primarily in the United States, Canada, India, Singapore and the United Kingdom. The company's offerings include QuickBooks financial and business management software and TurboTax income tax preparation products and services. The company was founded in 1983 and is headquartered in Mountain View, Calif. It is a component of the S&P 500 and has a market cap of $16.4 billion.
Competitors include Microsoft (NASDAQ: MSFT), Salesforce.com (NYSE: CRM) and Nuance Communications (NASDAQ: NUAN), as well as H&R Block (NYSE: HRB). Salesforce.com is expected to post double-digit year-over-year percentage EPS and sales revenue growth on Thursday. Nuance topped both EPS and sales estimates when it reported last week. H&R Block is expected to report earnings and sales declines for the most recent quarter, which included tax season.
During the three months that ended in April, Intuit launched a consumer banking app for the iPad and said it would acquire business software company Demandforce. Also, Jeff Weiner, CEO of LinkedIn (NYSE: LNKD), joined its board of directors.
Intuit's long-term earnings per share growth forecast is 14.5% and its price-to-earnings ratio is lower than the industry average. Its operating margin is higher than the industry average. Short interest is 6.4% of the float. Fourteen of 21 analysts who follow the stock recommend buying shares; none recommend selling them. Their mean price target is more than 11% higher than the current price.
At $55.49, shares are about 6% higher than at the beginning of the year. The stock briefly reached a multiyear high of $62.18 in February. Because of the recent pullback -- about 8% in the past month -- the share price is below the 50-day moving average. Over the past six months, the stock has outperformed H&R Block, Nuance Communications and Salesforce.com, but underperformed the broader markets.
Bullish: Investors interested in exchange traded funds invested in Intuit might want to consider the following trades:
- iShares S&P North America Tech-Software (NYSE: IGV) is more than 13% higher year to date.
- PowerShares QQQ (NASDAQ: QQQ) is more than 13% higher year to date.
- Technology Select Sector SPDR (NYSE: XLK) is more than 11% higher year to date.
Traders may prefer to consider these alternative positions:
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