Shares of Intuit Inc. (INTU - Free Report) have been gaining solid momentum, of late, and even crafted a 52-week high of $210.85 yesterday. One of the major reasons behind this could be the company’s outstanding third-quarter fiscal 2018 results. Also, encouraging fourth-quarter and full-fiscal outlook drove its shares higher.
Notably, the company has gained approximately 10.5% since it reported fiscal third-quarter results on May 22. The stock has outperformed its industry in the year-to-date period. Intuit has rallied 32.6% in the said period, while the industry has gained 17%.
The company’s results in the last reported quarter benefited from a number of reasons. Management was particularly positive about a successful tax season backed by performance of the DIY category and higher average revenue per return. The company also managed to gain some additional share in the DIY market. Additionally, the shift in its product mix toward the higher end of the company’s product line was also a positive.
Intuit has an impressive earnings surprise history, beating the Zacks Consensus Estimate in the trailing four quarters, with an average positive earnings surprise of 37.8%. Backed by the impressive results, the company issued upbeat outlook for the fourth quarter and full fiscal.
Factors Driving Intuit’s Robust Quarterly Performances
The company has two main products — QuickBooks which offer financial and business management online services and desktop software to small businesses, and TurboTax which offers income-tax preparation products and services. Notably, Intuit has been witnessing solid year-over-year growth for the past several quarters in its QuickBooks subscriber base, which is driving Small Business segment revenues.
It should be noted that about 29 million small businesses in the United States depend on third-party companies to deal with their financial and accounting related preparation. With its rich product portfolio, Intuit has capitalized well on this opportunity which is well reflected in its previous quarterly results.
For fiscal 2018, the company expects QuickBooks online subscriber base of 3.27-3.37 million. Per the Zacks Consensus Estimate, the company will end the fiscal fourth quarter with a subscriber base of 3.223 million, marking 45.2% year-over-year improvement.
The year-over-year increase in online subscriber base will continue to drive revenues, going forward. The innovative features being launched by the company will also aid the top line.
The company’s Consumer Tax segment revenue has been benefiting from strong adoption of its Turbo Tax products.
Intuit’s continued focus on bringing in innovative and easy-to-use TurboTax products for different users has helped it add new customers. The company, during the last earnings conference call, stated that its TurboTax Live offering witnessed success in the first season and is likely to be accretive to the company’s Consumer business, moving ahead.
The recently-launched Turbo offering that provides a snapshot of a user’s financial health also witnessed healthy adoption, which is yet another catalyst for expansion of the company’s business beyond tax.
Furthermore, its TurboTax products derive high margins which are likely to cushion Intuit’s bottom-line results.
A Buy Rated Stock
Intuit carries a Zacks Rank #2 (Buy) and flaunts a VGM Style Score of A. We note that our VGM score highlights the determining elements in a stock that can push the stock price higher. We can essentially filter out the negatives and focus on the positives which drive its price.
Consequently, we believe the stock has huge potential to surge higher and therefore, investors should consider it for near-term opportunities.
Some Other Stocks Worth Considering
Some other top-ranked stocks in the broader technology sector are Adobe Systems Incorporated (ADBE - Free Report) , Cadence Design Systems, Inc. (CDNS - Free Report) and Citrix Systems, Inc. (CTXS - Free Report) , all sporting a Zacks Rank of #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term expected EPS growth rates for Adobe, Cadence Design and Citrix Systems are 16.2%, 12% and 9.1%.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>