H&R Block Disappoints on Earnings

Michael Teague |

HR BlockH&R Block (HRB), the largest tax preparer in the U.S., posted fiscal fourth-quarter earnings after the regular trading day on Wednesday that showed the company missing revenue estimates slightly, but falling significantly short of earnings expectations.

H&R earned $664.3 million or $2.42 per share on revenue of $2.2 billion for the quarter ending April 30th. During the prior year period, the company had earned $586.1 million, or $1.99 per share on revenue of $2 billion. Analysts had expected earnings of $2.61 per share on revenue of $2.28 billion. Adjusted for items, Q4 revenue was still short of estimates at $2.54 per share.



With increasing competition from online, do-it-yourself tax services such as Intuit Inc.’s (INTU) TurboTax, the company devoted a great deal of effort and resources over the past year to develop its own online services. The company cited a more than 3 percent increase in returns filed with its desktop software.

H&R Block also implemented cost-cutting measures, shedding some 350 jobs throughout the year, and ending a contract with Wal-Mart (WMT) that saw the company shutter its offices in the mega-retailer’s outlets.

The company hired Goldman Sachs (GS) to help with a potential sell-off of its banking unit, which could make up to $400 million available. H&R repurchased 21.3 million shares at a cost of $315 million, or $14.82 per share during the fiscal year.

The company said that it prepared 0.7 percent less returns through the fiscal year, but is expected to get a boost from the passage of the White House’s signature Affordable Care Act, as well as the assumed passage of comprehensive immigration reform.

H&R’s shares closed on Wednesday at a loss of 2 percent to $28.63, and has so far been flat early in Thursday trading. Despite the substantial earnings miss, the stock is up over 56 percent year-to-date and has nearly doubled over the past 12 months.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
HRB H&R Block Inc. 26.28 -0.25 -0.94 2,668,334 Trade
WMT Wal-Mart Stores Inc. 104.59 0.29 0.28 8,378,580 Trade
GS The Goldman Sachs Group Inc. 256.12 5.15 2.05 4,643,375 Trade
INTU Intuit Inc. 167.74 3.34 2.03 1,555,402 Trade
AGRX Agile Therapeutics Inc. 3.54 0.07 2.02 268,767 Trade

Comments

Emerging Growth

Naked Brand Group Inc

Naked Brand Group Inc through its wholly-owned subsidiary is engaged in manufacturing and selling of direct and wholesale men's undergarments to consumers and retailers.

Private Markets

Voleo

Voleo is a free download that allows you to form investment clubs with your friends, family, colleagues, classmates, teammates…basically anyone you know and trust. Invest and manage a stock portfolio…

The Green Organic Dutchman

The Green Organic Dutchman Ltd. ("TGOD") produces farm grown, organic cannabis for medical use. The company grows its high quality organic cannabis in small batches using craft growing, all natural…