Shares of Intuit Inc.’s (NASDAQ:INTU) have been on the rise following its splendid fourth-quarter 2017 results. The indicators of a stock’s bullish run include a rise in its share price and strong fundamentals.
Rising Share Price
Intuithas been clocking solid returns on a year-over-year basis and has surged approximately 33.3%, outperforming the industry’s gain of 29.1%.
The tax-preparation related software maker reported splendid fourth-quarter results, along with providing an overwhelming first-quarter and fiscal 2018 guidance. Intuit’s fourth-quarter results not only fared better than our estimates, but also marked a significant year-over-year improvement, primarily owing to better-than-expected growth in QuickBooks Online and ecosystem along with new and improved products.
Other Driving Factors
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.
In a move to focus more on its core tax and accounting businesses, Intuit divested three businesses last year, namely Quicken, QuickBase and Demandforce. We believe that the company’s initiatives have provided it the much needed funds to invest in and focus more on the fast-growing online businesses. The company looks forward to add more recurring revenues within its Consumer Tax and Small Business segments, capitalizing on the ongoing shift toward digital solutions. Notably, the company’s cloud-based accounting software QuickBooks Online subscriber base surged 58% year over year in fiscal 2017 to 2.38 million. Intuit’s efforts to convert itself into a cloud-based tax and accounting solution provider are encouraging.
According to a study by non-profit association CompTIA released in September 2016, over 90% of the companies surveyed utilized some form of cloud computing. Of these, only 6% have been using such solutions for five years. In contrast, 23% of the companies have been using such solutions for a period of less than a year.