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H&R Block (HRB) Down 1.3% Since Last Earnings Report: Can It Rebound?

·3 min read

A month has gone by since the last earnings report for H&R Block (HRB). Shares have lost about 1.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is H&R Block due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

H&R Block's Q2 Loss Wider than Expected, Revenues Beat

H&R Block second-quarter fiscal 2021 adjusted loss per share of $1.09 that came above the Zacks Consensus Estimate of a loss of 93 cents. The company had suffered a loss of 85 cents per share in the year-ago quarter. Revenues of $177 million surpassed the consensus estimate by 7.5% and increased 9.8% year over year.

The improvement in the top line is due to higher tax return volume in the United States and Canada, and rise in small business payments processing and payroll volume at Wave.

Other Quarterly Numbers

Loss before interest, tax, depreciation and amortization from continuing operations came in at $168 million compared with a loss of $197 million in the year-ago quarter. Total operating expenses were $382 million, down 5% year over year.

H&R Block exited the quarter with cash and cash equivalents balance of $209 million compared with $2.6 billion at the end of the prior quarter. Long-term debt and line-of-credit borrowings were $1.6 billion compared with $3.5 billion at the end of the previous quarter.

The company used $242 million of cash in operating activities and capex was $18 million. The company paid out dividends of $50 million in the quarter.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -19.36% due to these changes.

VGM Scores

At this time, H&R Block has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, H&R Block has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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