With tax season finally over, one company is probably still
fresh in Americans' minds;
H&R Block (
. This Kansas City-based tax preparation company offers up tax
advice, do-it-yourself tax return preparation, and advances on tax
refunds across the country.
And though while many Americans certainly used their services this
past tax season, competitive pressures are certainly building for
this company. This is largely thanks to the advent and popularity
TurboTax software which is eating away at HRB's core market.
Thanks in part to this pressure, HRB stock has been struggling as
of late, as it has underperformed some of its key peers in the past
year. Plus, it hasn't helped that HRB has seen sluggish results in
international markets too, as this has forced the company to post
pretty horrendous results at earnings season, suggesting that HRB
has great trouble in meeting expectations
In fact, over the last four quarters, HRB has missed the Zacks
Consensus Estimate every time, with an average surprise of -226%.
The company's 'best' miss did come in the key tax season quarter
though, but even then the firm missed by nearly 2% when compared to
the Zacks Consensus Estimate.
With this recent weakness in mind and some serious competitive
pressures building on its lofty stock, it shouldn't be too
surprising to note that many earnings estimates have been falling
for HRB as of late. In the past 30 days, not a single estimate has
gone higher for HRB's earnings outlook, while several have gone
The pain is especially apparent when investors look to the current
year and next year time frames, as estimates have gone from
$1.67/share for the current year 60 days ago to just $1.62 today.
Meanwhile, for the next year period, $2.01/share was the estimate
two months ago, but once again this was pushed down, this time to
$1.95/share, suggesting that analysts are ratcheting down their
expectations for HRB not only in the near term, but over the long
haul as well.
These concerns have kept a lid on HRB's shares, as the stock has
added over 65% in the past two years, but just 6% in the trailing
12 months. And from a YTD look, HRB has lost about 4%
(underperforming the market) and it could face more trouble at its
next earnings report if recent earnings estimate trends are any
This is particularly true when investors consider that HRB has a
Zacks Rank #5 (Strong Sell) and that its earnings ESP metric is
negative. When combined, these factors are generally a harbinger of
negative news at earnings season, and given how sluggish HRB has
been at earnings season, it wouldn't be much of a shock at all to
see another lackluster report from this tax preparation firm.
If investors are searching for better picks in the
consumer services space
, it is worth noting that the sector currently has a poor Zacks
Industry Rank and that many firms in the segment have seen earnings
estimate revisions moving in the wrong direction. However, there is
, a stock that has a Zacks Rank #2 (Buy).
This security saw a positive surprise in its most recent earnings
report, and since its rank just moved from a #3 (Hold) to a #2
(buy), now might be the time to consider this stock instead of the
embattled H&R Block, at least until the earnings estimate
revision activity turns around for HRB.
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