What Makes Intuit (INTU) Stock A Lucrative Pick Right Now?

The technology space continues to be investors’ favorite due to its dynamic nature. This field is anticipated to grow faster than before. If you invest right, you can reap the benefits over time. The indicators of a stock’s bullish run include a rise in its share price, strong fundamentals and a continued uptrend in estimates.

We have evaluated one technology company that has demonstrated remarkable share price performance so far this year. Intuit Inc. (NASDAQ:INTU) generated high returns for investors in the last one year and has the potential to exceed expectations in the days ahead.

Intuit’s share price movement has been quite impressive of late. In the last one year, its shares have gained 30.6% compared with the Zacks categorized Computer-Software industry's gain of 27.8%.

Let’s look at the reasons behind Intuit’s solid momentum.

Upward Estimate Revisions

In the last 60 days, the Zacks Consensus Estimate for Intuit’s fiscal 2017 witnessed upward revisions. The Zacks Consensus Estimate for fiscal 2017 is now pegged at $3.54 per share compared with $3.45 projected over the same time frame.

Impressive Q3 Results

Intuit reported stellar third-quarter fiscal 2017 results. The company reported adjusted income (including stock-based compensation but excluding amortization and other one-time items) from continuing operations of $3.71 per share, surpassing the Zacks Consensus Estimate of $3.67.

This tax-preparation related software maker reported revenues of $2.541 billion, which came within management’s guided range of $2.50 billion to $2.55 billion surpassing the Zacks Consensus Estimate of $2.486 billion. On a year-over-year basis, revenues were up 10.3% on the back of higher demand emanating from the U.S. tax season and better-than-expected growth in QuickBooks Online.

Intuit raised its fiscal 2017 guidance and issued encouraging projections for the fourth quarter.

The company now anticipates revenues of $5.13 billion to $5.15 billion in fiscal 2017, up 9% to 10% year over year (previously $5 billion to $5.1 billion). The Zacks Consensus Estimate is pegged at 5.13 billion.

Non-GAAP operating income is now expected in the range of $1.705 billion to $1.725 billion, representing growth of 10% to 11% (previously $1.675 billion to $1.725 billion). Non-GAAP earnings per share are projected between $4.38 and $4.40, up 16% (previously $4.30 and $4.40 per share). The Zacks Consensus Estimate currently stands at $3.54 per share.

For the fiscal fourth quarter, the company anticipates revenues in the range of $795 million to $815 million. The Zacks Consensus Estimate is pegged at $808.33 billion.

The company expects to report non-GAAP earnings in the band of 16 cents to 18 cents per share. The Zacks Consensus Estimate stands at a loss of 6 cents..

Other Factors Driving the Stock?

We are positive about Intuit’s growing SMB exposure and believe that its strategic acquisitions will boost the segment. Increased adoption of its cloud-based services and products is another positive.

The company has restructured its business to focus on the QuickBooks services and expects to continue investing in this portfolio. These ventures might hurt the company’s near-term profitability.

Intuit has also delivered positive earnings surprises in the last four quarters with an average beat of 24.27%.

Given the company’s long-term earnings per share growth rate of 14.2%, a VGM Style Score of “A” and a Zacks Rank #2 (Buy), we believe that the stock still has much upside left. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Keeping these positives in mind, we believe that Intuit is one such technology stock that deserves a place in investors’ portfolio.

Other Key Picks

A few other stocks worth considering in the broader technology sector are Applied Optoelectronics, Inc. (NASDAQ:AAOI) , DXC Technology Company. (NYSE:DXC) and Applied Materials, Inc. (NASDAQ:AMAT) , each sporting a Zacks Rank #1. Applied Optoelectronics, DXC Technology and Applied Materials have expected long-term EPS growth rate of 20%, 8% and 16.58%, respectively.

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