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. 23.34 -0.32 -1.35 559,875
WMT Wal-Mart Stores Inc. 67.67 -0.44 -0.64 2,675,035
GS The Goldman Sachs Group Inc. 232.45 -1.85 -0.79 2,929,121
INTU Intuit Inc. 115.73 -0.06 -0.05 480,487
AGRX Agile Therapeutics Inc. 2.39 -0.06 -2.25 275,865

Comments

Emerging Growth

Breathtec BioMedical Inc.

Breathtec Biomedical Inc is a medical diagnostics company. It is engaged in developing & commercializing breath analysis devices for the early detection of infections & life threatening diseases including cancers,…

Private Markets

Trustify

Trustify provides trust and safety in both the digital and physical worlds through our vast network of on-demand Private Investigators.By removing the large retainers and high hourly rates that traditional…

Initial State

Initial State is an Internet of Things (IoT) data analytics & data management platform company. We turn sensor and event data into information that matters by making it easy to…