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H&R Block Drops After 1Q Revenue Miss

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Shares of H&R Block are down more than 2% in Wednesday's pre-market trading after the company's 1Q revenues fell short of analysts' expectations.

H&R Block’s (HRB) 1Q revenues soared 299.7% to $601 million year-over-year, due to the extension of the U.S. tax filing deadline to July 15 from April 15 as a result of the COVID-19 pandemic. However, sales generated in the reported quarter missed the Street consensus of $617 million.

Meanwhile, the company posted 1Q earnings of $0.55 per share after incurring a quarterly loss of $0.66 per share in the year-ago period. Analysts had estimated $0.50 per share in 1Q. The tax services provider ended 1Q with total US tax filing growth of 3.3%.

HRB’s CFO Tony Bowen stated that "Our results in the first quarter were strong, resulting in a positive start to the fiscal year." He added that "We’re in a solid financial position and are continuing the work of driving efficiencies in our business to fund our growth initiatives."

Following the 1Q results, BTIG analyst Mark Palmer said that HRB “capped off the most unusual tax season in its history with a better-than-expected adjusted earnings print for 1Q21 (the quarter ended July 31)". Nonetheless, Palmer maintained a Hold rating on the stock noting that “While the company’s shares appear relatively inexpensive and it showed signs of resuming a more normal footing during 1Q21, we believe its role in the post-pandemic US tax prep ecosystem remains unclear.” (See HRB stock analysis on TipRanks).

Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 2 Buys and 5 Holds. The average price target of $19.60 implies upside potential of 34% to current levels. Shares are down more than 37% year-to-date.

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