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Financial software and services provider Intuit Inc. (NASDAQ: INTU) reports earnings after close today.
The current Wall Street expectation for Intuit stock stands at $6.47 a share for the quarter. But the company itself guided much lower than that earlier this month.
One of Intuit's most popular products is Turbo Tax, the tax preparation software and service. Much of that business will come in close to the filing deadline. Since the quarter ended on the last business day of April, the IRS extension of the deadline to May 17 pushed a good deal of business into the next quarter.
That means one of the company's biggest revenue injections of the year could appear on the Q4 report rather than the Q3.
That said, growth in another massive segment could fuel the Intuit stock report in Q3. The stock also has the potential to scream "buy" if this report comes lower than expected.
Let's first take a look at what to expect from the Intuit earnings report today. Then, we'll share the right time to buy.
Intuit Stock Earnings Expectations
Intuit lowered its revenue guidance and now expects somewhere between $4.165 billion to $4.170 billion. That is down from the previous expectation of $4.605 billion to $4.655 billion. The management's profit forecast fell to the range of $6 to $6.05, down from the prior range of $6.75 to $6.85.
While that revenue will be delayed, Intuit said that it expects TurboTax Live customer growth to be up more than 70%. The TurboTax share of total returns could also be up year over year for the season.
Intuit is a global company with over 100 million customers for its products like TurboTax, QuickBooks, Mint, and Credit Karma.
While guidance for the quarter-end April 30 is down, management expects the rest of the year to see continued growth in revenue and profits. When announcing the lowered guidance for the April quarter, the company also said that it expected to exceed its prior guidance for the year, for both revenue and profits.
Intuit's personal finance app, Mint, is the number-one most downloaded finance app according to Intuit's website. It continues to receive rave reviews from sources including The New York Times, CNBC, and Business Insider.
Credit Karma just had its highest revenue quarter ever as people have focused on getting their finances in order.
With the May 17 tax deadline behind us, Intuit management will give us full-year guidance for the rest of the year and the conference call this afternoon.
Here's your best chance at getting Intuit stock at a bargain following the report.
How to Play the Inuit Stock Earnings Report
Wall Street expects to see a sharp increase in the guidance. Eight analysts have recently raised their expectations for profits in the next quarter and the full year 2021 and 2022.
In many cases, these types of estimate increases are predictive of an increase in the stock price.
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The purchase of Credit Karma, which closed in December, offers a wave of profit opportunities. Intuit is working on ways to cross-sell its existing product mix of things like Quick Books, Turbo Tax, and Mint to the more than 100 million Credit Karma users added to the company.
Anything over the high end of management's earnings guidance of $6.05 should be considered a positive earnings surprise for Intuit. If that happens, we could see some aggressive buying into the stock in the after-hours markets. That will follow through into the next morning's market opening.
The key to the direction of Intuit will be the guidance issued on the conference call. If the guidance for the full year is ramped a lot higher, we might see a breakout to new highs that aggressive traders can buy. We would suggest using a tight stop on a breakout trade.
If the results are less than guidance or management's forecast is not as bright as Wall Street expects, we could see a sharp decline in Intuit shares.
Intuit stock is up 5% going into earnings as traders have become more bullish nearing the report. If the report disappoints, the recent buyers will quickly unload their position.
A disappointment in revenue and profit guidance could push some longer-term holders to take profits in the stock as well.
If we do see selling, it is probably a good idea to resist buying the dip until the stock falls to the 50-day moving average around $405, a fall of around 8%. If the stock falls to that area and begins to consolidate, traders could consider jumping back into the stock.
If the stock does not pause and consolidate, we would avoid the stock until it got down to around the major price support formed in the $375 area, about 15% below the current price level.
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