Intuit (INTU) Implied Volatility Skew Suggest Fear Of Downside Move Priced In
$Intuit(INTU)$ is expected to release earnings on Nov 28, 2023 after the market closes (AMC). Intuit Inc. the global financial technology platform that makes Intuit TurboTax, Credit Karma, QuickBooks, and Mailchimp.
The consensus EPS Estimate is $1.98 (+19.3% Y/Y) and the consensus Revenue Estimate is $2.88B (+10.8% Y/Y).
Intuit (INTU) Upcoming Earnings Guidance
INTU has issued earnings guidance for FY 2024. EPS estimate in the range of 16.17 to 16.47, which would be a 13% increase from the prior year.
Revenue estimate in the range of 15.89 B to 16.105 B, which would be a 11% increase from the prior year. Revenue Growth estimate in the range of 11.0% to 12.0%.
INTU last reported earnings on 24 Aug 2023, we saw its shares gained +4.1% the day following the earnings announcement to close at 518.15.
Following its earnings release, 95 days ago, INTU stock has drifted +8.3% higher. From the time it announced earnings, INTU traded in a range between 473.56 and 571.82. The last price (561.23) is closer to the higher end of range.
Over the last 2 years, INTU has beaten EPS estimates 88% of the time and has beaten revenue estimates 75% of the time.
Intuit (INTU) Historical Moves Ahead of Earnings
INTU historically moved higher heading into earnings more often than not. On average, the stock gained 0.0% for the 2 week period before earnings (based on the last 12 quarters of data).
Intuit Historical Stock Price Reaction to Earnings
INTU shares have moved higher in the immediate aftermath of earnings 9 out of 12 previous reports. On average the stock moved up 2.2% in the first day of trading after the company reported earnings.
Intuit (INTU) Stock Behavior After Earnings
Based on the previous 12 earnings releases, INTU is more likely to trade lower 1 day after earnings for an average loss of -1.1%
Intuit (INTU) Post Earnings Announcement Drift
INTU share price has drifted up 8.3% post earnings announcement. Using the last 12 quarters data, the average drift between earnings announcements is 3.1%. The current drift represents a positive 0.5 standard deviation move.
Current post earnings announcement drift: 8.3%
Historical average post earnings announcement drift: 3.1%
Historical post earnings drift standard deviation move: ±17.9%
Intuit (INTU) Post Earnings Movement
The options market overestimated INTU stocks earnings move 67% of the time in the last 12 quarters. The predicted move after earnings announcement was ±5.0% on average vs an average of the actual earnings moves of 4.4% (in absolute terms).
Intuit (INTU) Earnings Implied Volatility Crush
INTU's last earnings implied volatility (IV30) going into earnings was 33.5. The last time INTU released earnings, the implied volatility dropped to 26.9, resulting in an implied volatility crush of 20%. 5 days after earnings, the 30 day IV was 23.5. You can compare how INTU implied volatility changed around earnings for the last 12 quarters.
Average Implied Volatility Crush For INTU Earnings: 16%
Average 30 Day Implied Volatility 1 Day Before Earnings: 38.2
Average INTU 30 Day IV for the Day of Earnings: 32.0
Average 30 Day Implied Volatility 5 Days After Earnings: 32.8
Intuit (INTU) Implied Volatility Skew
The implied volatility skew shows the market's bias for pricing in volatility risk to the option premium of downside puts and upside calls.
We can see that the 25-Delta Put IV is increasing relative to Call IV, this suggests the market is pricing in a larger fear to a downside move.
Summary
Based on what we have seen from the implied volatility skew, market seem to be pricing in a larger fear to a downside move. This could resonate with Intuit did warned at their investor day in September that certain macroeconomic headwinds were affecting its business.
Intuit specifically mentioned that small businesses have lower cash reserves compared with last year and consumers remain under pressure.
I will be looking out for these factors as to how much could they have impacted the results.
Appreciate if you could share your thoughts in the comment section whether you think Intuit results would be greatly affected by the macroeconomic headwinds warned earlier?
@TigerStars @Daily_Discussion @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.
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It's concerning to hear that small businesses have lower cash reserves and consumers are under pressure. Do you see this translating into Intuit's upcoming results?
Given the market's fear of a downside move and Intuit's investor day comments, what do you think are the key areas we should be watching out for in their upcoming results?
Intuit's insights into small businesses and consumers are worrying. In your opinion, how could this affect their overall performance in the near future?
I agree, the macroeconomic headwinds mentioned by Intuit could have a significant impact.
The implied volatility skew definitely suggests a bigger fear of a downside move.