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Factors to Note Ahead of Intuit's (INTU) Q3 Earnings Release

Intuit INTU is scheduled to report third-quarter fiscal 2023 results on May 23.

The company projects fiscal third-quarter revenues to grow year over year in the 8-9% range. The Zacks Consensus Estimate for revenues is pegged at $6.09 billion, indicating year-over-year growth of 8.1%.

On a non-GAAP basis, Intuit anticipates earnings per share in the range of $8.42-$8.49. The consensus mark for earnings is pegged at $8.45 per share, suggesting a year-over-year rise of 10.5%.

Intuit Inc. Price and EPS Surprise

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

Key Factors at Play

The gradual recovery in Small Business and Self-Employed is expected to have contributed to the top line in the quarter under review. The Zacks Consensus Estimate for Small Business’ quarterly revenues is pegged at $1.94 billion. In the last quarter, the business unit grew 20%, driven by solid customer growth in QuickBooks Online payroll, Mailchimp and QuickBooks Online payments.

Intuit’s fiscal third-quarter revenues are likely to have witnessed solid growth in the Online Ecosystem, driven by an expanding subscriber base for Quickbooks Online and ARPC. The Zacks Consensus Estimate for total Online Ecosystem’s revenues is pegged at $1.44 billion for the quarter under review, indicating a 21.1% rise from the prior year's reported figure. The consensus mark for Quickbooks Online’s revenues is pegged at $715 million, suggesting a 23.7% year-over-year improvement. The Online Ecosystem is likely to have boosted overall sales in the third quarter.

The solid momentum of INTU’s leading product, QuickBooks Capital and improving customer retention rates are anticipated to have acted as tailwinds in the fiscal third quarter.

In the fiscal third quarter, new customer addition and extension filers are likely to boost revenues from the company’s Consumer tax business. The Zacks Consensus Estimate for the Consumer tax business’ revenues is pegged at $3.52 billion, higher than the year-ago quarter’s reported figure of $3.24 billion.

However, due to the ongoing macroeconomic volatility, Intuit business partners have been pulling back from extending their credit, risking credit performance deterioration in the near term. This is expected to have led to lower Credit Karma revenues in the quarter to be reported. The business unit contributed $375 million to INTU’s second-quarter fiscal 2023 total revenues. The Zacks Consensus Estimate for Credit Karma’s third-quarter revenues is pegged at $377 million, indicating a year-over-year decline of 19.4%.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for Intuit this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that’s not the case here.

INTU has an Earnings ESP of 0.00% and a Zacks Rank #3 at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With the Favorable Combination

Per our model, HP HPQ, NVIDIA Corporation NVDA and Ulta Beauty ULTA have the right combination of elements to post an earnings beat in the upcoming releases.

Currently, HP has an Earnings ESP of +1.85% and carries a Zacks Rank #2. The company is scheduled to report its second-quarter fiscal 2023 results on May 30. HPQ’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average earnings surprise of 1.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for HP’s fiscal second-quarter earnings is 76 cents per share, indicating a year-over-year decline of 29.6%. The company is estimated to report revenues of $13.07 billion, which suggests a drop of 20.7% from the year-ago quarter.

NVIDIA has an Earnings ESP of +2.43% and carries a Zacks Rank #3 at present. The company is scheduled to report its first-quarter fiscal 2024 results on May 24. The company’s earnings surpassed the Zacks Consensus Estimate in two of the trailing four quarters, missing twice, the average surprise being negative 3.2%.

The Zacks Consensus Estimate for NVDA’s fiscal first-quarter earnings is pegged at 92 cents per share, indicating a 32.4% drop from the year-ago quarter’s $1.36. The consensus mark for revenues is $6.51 billion, suggesting a year-over-year decrease of 21.5%.

Ulta Beauty has an Earnings ESP of +0.66% and carries a Zacks Rank #3 at present. The company is set to report first-quarter fiscal 2024 results on May 25. ULTA’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 26.2%.

The Zacks Consensus Estimate for ULTA’s quarterly earnings is pegged at $6.81 per share, suggesting a year-over-year increase of 8.1%. Its quarterly revenues are estimated to increase 11.5% year over year to $2.62 billion.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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