Intuit (INTU) Stock Gains on Earnings Beat, Raised Guidance

NEW YORK (TheStreet) -- Intuit (INTU) shares are up 4.19% to $108.52 in early market trading on Friday following the release of the TurboTax parent company's third quarter earnings results after the closing bell yesterday.

The company reported a third quarter profit of $501 million, or $2.85 per share on an adjusted basis, ahead of analysts' $2.73 per share expectations for the period. Revenue for the period increased 8% year over year to $2.2 billion.

"We delivered a strong quarter, exceeding our company financial revenue target amidst another strong tax season and accelerating growth in our small business online ecosystem," said president and CEO Brad Smith. "We achieved our goals in our tax business, increasing growth in the do-it-yourself software category, acquiring and retaining more customers and expanding our market share.

As a result of the strong quarter the company raised its full year earnings guidance to between $2.50 and $2.52 from its previous view between $2.45 and $2.50. Intuit also raised its revenue guidance to between $4.395 billion and $4.420 billion versus its previous view between $4.275 billion and $4.375 billion.

TheStreet Ratings team rates INTUIT INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate INTUIT INC (INTU) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, solid stock price performance, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • INTU's revenue growth has slightly outpaced the industry average of 1.5%. Since the same quarter one year prior, revenues slightly increased by 3.3%. 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.
  • Compared to its closing price of one year ago, INTU's share price has jumped by 38.44%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, INTU should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. 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.
  • Net operating cash flow has slightly increased to $365.00 million or 9.93% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -15.51%.
  • INTU's debt-to-equity ratio is very low at 0.21 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.94 is somewhat weak and could be cause for future problems.
  • You can view the full analysis from the report here: INTU Ratings Report

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