H&R Block Inc
) 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. (
) - 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 (
) yield of 1.01%. Nonetheless, it faces intense competition
from Intuit Inc. (
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.
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
and a Zacks Rank #1, 2 or 3 for this to happen. This is not the
case here, as you will see below.
: 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.
: 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
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