Barbarian At The Gate: Intuit (INTU)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Intuit ( INTU) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Intuit as such a stock due to the following factors:

  • INTU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $193.0 million.
  • INTU has traded 649,667 shares today.
  • INTU traded in a range 253% of the normal price range with a price range of $3.60.
  • INTU traded above its daily resistance level (quality: 533 days, meaning that the stock is crossing a resistance level set by the last 533 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on INTU:

Has made a number of mobile, payment services and ecommerce realted acquisitionsin 2012 and 2013. The stock currently has a dividend yield of 1%. INTU has a PE ratio of 27.2. Currently there are 7 analysts that rate Intuit a buy, 1 analyst rates it a sell, and 8 rate it a hold.

The average volume for Intuit has been 1.8 million shares per day over the past 30 days. Intuit has a market cap of $20.9 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 0.86 and a short float of 4.2% with 4.62 days to cover. Shares are down 3.8% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Intuit as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, increase in net income and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • INTU's revenue growth has slightly outpaced the industry average of 10.6%. Since the same quarter one year prior, revenues rose by 10.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • INTU's debt-to-equity ratio is very low at 0.22 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.26, which illustrates the ability to avoid short-term cash problems.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Software industry and the overall market, INTUIT INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Software industry. The net income increased by 42.1% when compared to the same quarter one year prior, rising from -$19.00 million to -$11.00 million.
  • The gross profit margin for INTUIT INC is currently very high, coming in at 84.41%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -1.76% is in-line with the industry average.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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