Affirm Holdings (AFRM) vs. Intuit (INTU): Which Stock Is More Likely to Beat

The operator of digital commerce platform Affirm Holding (AFRM) and financial tech company Intuit (INTU) are scheduled to report their fourth quarter and fiscal year 2023 results tomorrow after the market close. Let’s determine which stock is more likely to beat earnings expectations. Continue reading….

In this piece, I evaluated Affirm Holdings, Inc. (AFRM) and Intuit Inc. (INTU) to determine which stock could surpass earnings set to be released on August 24, 2023. Based on the fundamental comparison of these stocks, I believe INTU is more likely to beat earnings estimates and is a better buy for the reasons explained throughout this article.

AFRM, the payment network that empowers consumers and assists merchants in driving growth, will publish its fourth quarter and fiscal year 2023 results tomorrow. During the third quarter, AFRM reported a loss of $0.69 per share, still topping the consensus loss per share estimate of $0.91. The fintech company’s revenue was $381 million, beating the $366.90 million analysts expected.

Although Affirm’s losses for the third quarter were lower than anticipated, a revenue deficit of $205.70 was more than triple 2022’s setback.

After the better-than-expected performance, the fintech firm slightly improved the mid-point of its full-year outlook across all metrics. AFRM expects revenue to be in the range of $390-$415 million for the fourth quarter and $19.89-$20.04 billion for the fiscal year 2023.

Further, the company’s gross merchandise volume (GMV) is expected to be between $5.20-$5.35 billion for the fourth quarter and $19.89-$20.04 billion for the full year. Its adjusted operating margin is estimated to arrive between negative 5%-1% for the quarter and negative 7%-5.9% for 2023.

At the same time, analysts expect AFRM’s revenue to increase 11.6% year-over-year to $406.26 million for the quarter that ended June 2023. The company is estimated to report a loss per share of $0.85 for the to-be-reported quarter, compared to $0.65 in the year-ago period.

For the fiscal year 2023, the consensus revenue estimate of $1.55 billion indicates an improvement of 14.8% year-over-year. But analysts expect AFRM’s loss per share for the current year to widen 38.7% year-over-year to $3.48.

INTU, the global financial technology platform that makes TurboTax, Credit Karma, QuickBooks, and Mailchimp, will also announce its fourth-quarter and full-year financial results for 2023 on August 24, following the close of the market. The company reported net revenue of $6.02 billion and adjusted earnings per sales of $8.92 for the third quarter, up 7% and 17% year-over-year, respectively.

While INTU posted lighter-than-expected sales, it beat analysts’ earnings expectations. Analysts polled by FactSet expected third-quarter earnings of $8.48 per share on revenue of $6.09 billion. Following a solid financial performance, the company raised its full-year 2023 guidance.

“We are raising our total company revenue, operating income, and earnings per share guidance for the fiscal year, demonstrating the strength and resiliency of our platform and portfolio in uncertain times,” said Sasan Goodarzi, INTU’s chief executive officer. “The benefits of our global financial technology platform are more mission-critical than ever to our customers.

The financial software company INTU expects revenue of $14.28 billion to $14.32 billion, an increase of nearly 12-13% year-over-year, up from the prior guidance of 10-12% growth. The company’s non-GAAP earnings per share are expected to be between $14.20-$14.25, an increase of approximately 7 to 8%, compared to previous guidance for a decline of nearly 5 to 1%.

For the fourth quarter that ended July 31, INTU expects revenue growth of approximately 9 to 10% and non-GAAP earnings per share of $1.46 to $1.48.

Meanwhile, analysts expect INTU’s revenue and EPS for the fourth quarter to increase 9.4% and 30% year-over-year to $2.64 billion and $1.43, respectively. Moreover, the company’s revenue and EPS for the to-be-reported fiscal year 2023 are expected to grow 12.4% and 20.1% year-over-year to $14.30 billion and $14.23, respectively.

INTU is a clear winner in terms of price performance, with 7.4% returns over the past three months compared to AFRM’s 2.1% decline. INTU has gained 20.1% over the past six months, while AFRM surged 5.7%. Also, INTU’s 9.4% gains over the past year compared to AFRM’s decline of 51.8%.

Here are the reasons why we think INTU could perform better in the near term:

Latest Developments

On August 15, AFRM and Selfbook, the tech company modernizing hotel payments and bookings, announced a partnership, bringing Affirm’s flexible, transparent payment options to Selfbook’s hotel bookings. AFRM and Selfbook are launching the partnership with their first joint hotel partners, Cape May La Mer, Victor Hotels, and The Kartrite. This collaboration should bode well for the companies.

On June 29,…