Intuit's IRS Delay Exposure Looks Manageable (INTU)

Intuit Inc. (NASDAQ: INTU) is among a handful of companies which are close to being entirely dependent upon the business around tax filing season.  The company has quantified what some IRS exposure will be if the tax men are unable to accept e-filed returns until February for certain taxpayers.  The impact would not change its annual reporting targets, but the expected cut to the current quarter which ends on January 31 as being $40 million to $60 million in revenue and in operating income from its second fiscal quarter.

The revenues would still be seen this year, but would be pushed out into the following quarter.  Taking a look at estimates shows that Thomson Reuters has a consensus of $927.9 million in revenues and $0.39 EPS for the current quarter in question.  To show just how dependent the company is on tax season in April, Thomson Reuters shows consensus estimates of $2.15 EPS and $1.78 billion in revenues for the next quarter which includes the tax filing season in April.  That quarter would account for almost half of the annual revenues with estimates of $3.82 billion and the bulk of its earnings as the July fiscal year earnings are expected to be $2.41 EPS.

Intuit further noted that the IRS delay is not expected to impact full-year revenue or operating income for Intuit or the Consumer Tax and Accounting Professionals segments.

Shares have not closed above $50.00 yet in 2011.  Despite having hit $50.00 and higher on seven trading days since December 21, 2010 when it did close at $50.08, there have been no other $50+ closing prices and Thursday’s close of $48.30 was the lowest since December 13, 2010.

This IRS issue is an obvious overhang.  The company is now trying to demonstrate that it is not a wipe-out for its revenues.  Intuit has traded in a range of $29.00 to $50.54 over the last 52-weeks and shares are indicated down 0.75% at $47.94 on very thin indications this Friday morning.

JON C. OGG