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H&R Block (HRB) Incurs Narrower-Than-Expected Loss in Q3

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H&R Block Inc.HRB incurred third-quarter fiscal 2018 (ended Jan 31, 2018) loss from continuing operations of $1.16 per share, narrower than the Zacks Consensus Estimate of loss of $1.33. Better-than-expected results were attributable to a rise in revenues during the quarter.

Consolidated loss for the quarter came in at $1.18 per share compared with loss of 50 cents in the year-ago quarter owing to changes in effective tax rate resulting from the recently enacted federal corporate tax legislation.

Operational Performance

H&R Block reported revenues of $488.4 million in the fiscal third quarter compared with $451.9 million in the prior-year quarter. The year-over-year increase in revenues was attributable to higher return volumes in both Assisted and DIY tax preparation businesses. Revenues beat the Zacks Consensus Estimate of $457 million.

H&R Block, Inc. Price, Consensus and EPS Surprise

H&R Block, Inc. Price, Consensus and EPS Surprise | H&R Block, Inc. Quote

As of Feb 28, 2018, total U.S. return volume increased 3.4% with returns from Assisted and DIY businesses increasing 0.7% and 8.2%, respectively. While the Assisted business benefited from the success of early-season promotions including the company's Refund Advance no-interest loan and Free Federal 1040EZ offer, DIY business gained from continued product improvements, enhanced partnerships and the H&R Block More Zero promotion.

Total operating expenses increased 2% year over year to $585.7 million due to higher compensation costs.

Financial Position

H&R Block exited the quarter with cash and cash equivalents of $187.4 million compared with $221.2 million in the year-ago period. Total outstanding long-term debt was approximately $2,284.2 million compared with $2,592.6 million in the prior-year quarter.

For the first nine months of fiscal 2018, net cash used for operating activities was $1,357.7 million compared with $1,409.9 million in the year-ago quarter.

Dividend

The board of directors declared a quarterly dividend of 24 cents per share payable on Apr 2 to shareholders on record as of Mar 13. The company has been paying uninterrupted quarterly dividends to its shareholders since it went public in 1962.

Zacks Rank & Other Stocks to Consider

H&R Block expects to continue improving its financial performance in the remainder of the fiscal year with increase in client trajectory. Also, the company reiterated its earlier guidance. H&R Block carries a Zacks Rank #2 (Buy). Other stocks worth considering in the industry include Monro, Inc. MNRO , SP Plus Corporation SP and Weight Watchers International, Inc. WTW , each sporting Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Monro has a long-term earnings growth expectation of 13.7%. It topped earnings estimates twice in the trailing four quarters with an average positive surprise of 0.9%.

SP Plus has a long-term earnings growth expectation of 10%. It topped earnings estimates thrice in the trailing four quarters with an average positive surprise of 23.2%.

Weight Watchers has a long-term earnings growth expectation of 15%. It topped earnings estimates in each of the trailing four quarters with an average positive surprise of 42.2%.

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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 Nasdaq, Inc.


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

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