Will H&R Block (HRB) Miss Q1 Earnings on Idle Tax Season? - Analyst Blog

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H&R Block Inc . ( HRB ) is set to report fiscal first quarter 2015 results on Sep 3. Last quarter, it posted a 5.33% surprise. Let's see how things are shaping up for this announcement.

Factors Influencing the Past Quarter

Though the company will divest its H&R Block Bank to BofI Federal Bank - subsidiary of BofI Holding, Inc. ( BOFI ) - to intensify its focus on the core tax business, it will witness dilution of about 7-9 cents per share on an annualized basis stemming from the service agreement with BofI Federal Bank. Nonetheless, the bank transaction will result in about $200 million to $250 million of immediate excess capital.

Effective Jan 1, 2014, as per the Affordable Care Act (ACA), all Americans should either have health insurance in 2014 or pay a penalty through this year's tax return. As a result, the company expects to gain slightly from ACA implementation.

The company has consistently returned value to shareholders. Its dividend yield of 2.38% betters the industry average of 2.08% and another player, Monro Muffler Brake Inc.'s ( MNRO ) yield of 1.01%.  Nonetheless, it faces intense competition from Intuit Inc. ( INTU ).

As most of the clients file their tax returns from January through April of each year, most of H&R Block's revenues from income tax return preparation as well as related services and products are received during this period. As a result, the Tax Services segment generally operates at a loss through the first eight months of a fiscal year. The first quarter results of H&R Block are likely to be impacted by this tax seasonality.   

Earnings Whispers

Our proven model does not conclusively show that H&R Block is likely to beat earnings this quarter because it does not have the right combination of two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below.

Zacks ESP :  H&R Block has an Earnings ESP of 0.00%. That is because the Most Accurate estimate and Zacks Consensus Estimate stand at a loss of 41 cents.

Zacks Rank : H&R Block has a Zacks Rank #3 (Hold) that increases the predictive power of ESP. A combination of Zacks Rank #3 and a 0.00% Earnings ESP makes surprise prediction difficult.


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INTUIT INC (INTU): Free Stock Analysis Report

BLOCK H & R (HRB): Free Stock Analysis Report

MONRO MUFFLER (MNRO): Free Stock Analysis Report

BOFI HLDG INC (BOFI): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: INTU , HRB , MNRO , BOFI

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