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H&R Block's (HRB) Q3 Loss Narrower Than Expected, Revenues Beat

·3 min read

H&R Block, Inc. HRB reported third-quarter fiscal 2021 adjusted loss per share of $1.17 that came below the Zacks Consensus Estimate of a loss of $1.25. The company had suffered a loss of 59 cents per share in the year-ago quarter.

Revenues of $308 million surpassed the consensus estimate by 35% but decreased 41% year over year. The decline was due to the late start to the U.S. tax season and a later-than-usual opening of IRS e-file, partially offset by increased fees from Emerald Card transactions, rise in small business payments processing and payroll volume at Wave, and improved international results.

Shares of H&R Block have gained 31.1% over the past year compared with 59.9% rally of the Zacks S&P 500 composite.

Quarterly Numbers in Detail

Service revenues of $245 million decreased 42% year over year. Royalty, product and other revenues came in at $64 million, declining 36% year over year.

Pretax loss came in at $284 million compared with a loss of $177 million in the year-ago quarter. Total operating expenses were $572 million, down 15% year over year.

H&R Block exited the quarter with cash and cash equivalents balance of $280 million compared with $209 million at the end of the prior quarter. Long-term debt and line-of-credit borrowings were $2.4 billion compared with $1.6 billion at the end of the previous quarter.

H&R Block used $646 million of cash in operating activities and capex was $21 million. The company paid out dividends of $48 million in the quarter.

2021 Outlook

H&R Block expects revenues in the range of $3.5 billion to $3.6 billion in 2021, the midpoint ($3.55 billion) of which is slightly below the current Zacks Consensus Estimate of $3.56 billion. EBITDA is expected to be between $950 million and $1 billion.

H&R Block currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank stocks here.

Performance of Some Business Services Companies

Rollins’ ROL fourth-quarter 2020 adjusted earnings of 13 cents per share came ahead of the consensus estimate as well as the year-ago figure by 18.2%. Revenues of $536.3 million beat the consensus mark by 1.7% and improved 6% year over year.

IHS Markit’s INFO fourth-quarter fiscal 2020 adjusted earnings per share of 72 cents beat the Zacks Consensus Estimate by 7.5% and increased 11% on a year-over-year basis. Total revenues came in at $1.11 billion, marginally missing the consensus mark and declining 1% from the year-ago quarter on a reported basis.

Automatic Data Processing’s ADP second-quarter fiscal 2021 adjusted earnings per share of $1.52 beat the consensus mark by 17.8% and were flat year over year. Total revenues of $3.69 billion beat the consensus mark by 3.2% and improved 0.7% year over year.

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