H&R Block ( HRB ) announced its total tax returns prepared grew 6.7% for the first of three interim period ending February 15.
Total digital tax returns grew 16.7%, drive by an increase of more than 24% in online filings. Total retail returns were prepared to grow 2.1%.
H&R Block remains focused on increasing new client growth. The company finalized on five drivers that would help it to grow the number of new clients. These efforts helped the company to gain market share in the digital space. In 2011, total returns prepared increased 6% over 2010, while in the U.S. it increased to a record 6.5%since 2001. The company's client base in digital increased by 800,000, with online growth of about 29% while in retail, Tax Services clients grew more than 500,000.
Also, H&R Block has a sustained focus on expense reduction. The company expects realigning its field and corporate support organization to save $100−$150 million by the end of fiscal 2012.
H&R Block's adjusted loss of 38 cents per share in fiscal second-quarter was wider than the Zacks Consensus Estimate of a loss of 35 cents and year-ago loss of 36 cents.
The Zacks Consensus Estimate for fiscal third-quarter 2012 is 9 cents per share. For fiscal years 2012 and 2013, the Zacks Consensus Estimates are a respective $1.46 and $1.67. H&R Block is scheduled to release its fiscal third quarter earnings results on March 9 after the bell.
The company's leading position in the tax preparer market, its strategic initiatives to grow its business by gaining and retaining customers augur well for long-term growth. The company's effort to return more value to its shareholders will also help retain investor confidence in the stock.
We retain our Neutral recommendation on H&R Block. The quantitative Zacks #3 Rank (short-term Hold rating) for the company indicates no clear directional pressure on the shares over the near term.
Headquartered in Kansas City, Missouri, H&R Block Inc. is a leading provider of tax preparation services. Through its subsidiaries, the company provides tax, retail banking, accounting and business consulting services and products in the U.S., Canada and Australia. It competes with Intuit Inc. ( INTU ).