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Intuit (INTU) to Report Q4 Earnings: What's in the Offing?

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Intuit Inc. (INTU - Free Report) is scheduled to release fourth-quarter fiscal 2019 results on Aug 22.

Notably, the company’s earnings beat estimates in all the trailing four quarters, the average being 55.51%.

The company’s revenues in the fiscal third quarter grossed $3.27 billion, up 12% from the year-ago figure. Robust online ecosystem revenues and a healthy tax season were key drivers in the last reported quarter.

Intuit Inc. Price and EPS Surprise

Intuit Inc. Price and EPS Surprise

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

What to Expect in Q4

The company expects revenue growth in the 10-12% range. The Zacks Consensus Estimate is pegged at $961.37 million, implying a 2.69% dip from the year-ago reported figure.

The company anticipates non-GAAP loss in the band of 16-14 cents per share. The consensus estimate for the same is pegged at a loss of 14 cents, indicating a decline from earnings of 32 cents per share reported in the year-ago quarter.

Let's see, how things are shaping up for the upcoming announcement.

Factors at Play

Intuit’s fourth-quarter fiscal 2019 results are likely to be driven by solid growth in the Online Ecosystem. Increasing subscriber base of QuickBooks Online, which is driving the Small Business & Self-Employed segment — the major revenue contributor — is a tailwind.

The Zacks Consensus Estimate for Quickbooks Online’s revenues is pegged at 265 million, suggesting a 35.9% surge from the prior-year number.

Moreover, the consensus mark of 4,407 for QuickBooks Online subscriber count is indicated to grow around 29.2% from the year-earlier figure.

Furthermore, growth in the TurboTax Live offering is likely to be accretive to the Consumer tax business.

A solid momentum from the company’s lending product QuickBooks Capital is a positive as well. Additionally, we are optimistic about the company’s QuickBooks Online Advanced solution, which is targeting the midmarket.

However, the fiscal fourth quarter is traditionally a slow quarter for Intuit. This is because the profitable tax season ends in the third quarter every year. Therefore, this seasonality is expected to be a headwind for the company’s top line in the to-be-reported quarter.

Moreover, in the quarter to be reported, the company expects to incur losses as revenues from the tax business are likely to remain at the lowest during this period despite operating expenses remaining consistent.

Sluggishness in the PC market is expected to weigh on the Desktop ecosystem revenues. The Zacks Consensus Estimate for revenues in the segment stands at $433 million, indicating a 6.7% decline from the year-ago reported figure.

Also, the acquisition of Origami Logic during the fiscal fourth quarter is expected to induce high acquisition costs. However, the buyout is not likely to materially impact the bottom line in the to-be-reported quarter.

What Does the Zacks Model Say?

The proven Zacks model shows that a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

Intuit has a Zacks Rank #3, which increases the predictive power of ESP. However, its Earnings ESP of 0.00% in the combination makes surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Following are a few stocks worth considering with the right mix of elements to beat estimates this earnings season:

The Cooper Companies, Inc. (COO - Free Report) has an Earnings ESP of +1.50% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Burlington Stores, Inc. (BURL - Free Report) has an Earnings ESP of +1.13% and a Zacks Rank of 2.

Carter Bank & Trust (CARE - Free Report) has an Earnings ESP of +3.85% and is Zacks #2 Ranked.

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