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H&R Block (HRB) Incurs Narrower Loss in Q3, Revenues Down
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H&R Block Inc. (HRB - Free Report) reported third-quarter fiscal 2017 (ended Jan 31, 2017) adjusted loss from continuing operations of 49 cents per share, narrower than the Zacks Consensus Estimate of a loss of 71 cents. However, it was wider than a loss of 34 cents reported in the prior-year quarter.
Owing to the seasonality of its tax business, H&R Block typically reports loss in the third quarter. Results were affected by the decline in revenues during the quarter.
Operational Performance
H&R Block reported revenues of $451.9 million in the fiscal third quarter, down 4.8% year over year. The fall was primarily due to decline in client volumes in the Assisted and DIY tax preparation businesses resulting from the delay in the overall tax season, and pricing impact of the early season promotions which include Free Federal 1040EZ and H&R Block More Zero. Revenues marginally beat Zacks Consensus Estimate of $451 million.
Total operating expenses declined 3% year over year to $576.7 million driven by effective cost management.
Financial Position
H&R Block exited the quarter with cash and cash equivalents of $221.2 million compared with $189.5 million as of Jan 31, 2016. Total outstanding long-term debt was approximately $2.6 billion, in line with the year-ago level.
For the year ended Jan 31, 2017, net cash used for operating activities was $1.4 billion, which was the same as the year ago period.
Share Repurchase and Dividend
The company bought back approximately 4.4 million shares in the reported quarter for $100 million, bringing the total share repurchases for fiscal 2017 to approximately 14 million shares for $317 million.
The company completed share repurchases under a $3.5 billion share repurchase program as of Aug 2015 which will run through Jun 2019. Per this program, the company repurchased approximately 70 million shares, or 25.5% of shares outstanding at the beginning of the program for an aggregate purchase price of approximately $2.3 billion.
The board of directors declared a quarterly dividend of 22 cents per share, payable on Apr 3 to shareholders on record as of Mar 14. The company has paid quarterly dividends consecutively to its shareholders since the company went public in 1962.
Intuit Inc. (INTU - Free Report) reported adjusted earnings per share of 7 cents, which surpassed the Zacks Consensus Estimate of 6 cents.
Zacks Rank & Stocks to Consider
H&R Block presently carries a Zacks Rank #4 (Sell). A couple of better-ranked stocks in the Consumer Services Miscellaneous industry include SP Plus Corporation (SP - Free Report) and Weight Watchers International, Inc. (WTW - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
SP Plus has a long-term earnings growth expectation of 11.5% and has an average forward PE of 20.9x.
Weight Watchers has a long-term earnings growth expectation of 15% and has an average forward PE of 14.1x.
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H&R Block (HRB) Incurs Narrower Loss in Q3, Revenues Down
H&R Block Inc. (HRB - Free Report) reported third-quarter fiscal 2017 (ended Jan 31, 2017) adjusted loss from continuing operations of 49 cents per share, narrower than the Zacks Consensus Estimate of a loss of 71 cents. However, it was wider than a loss of 34 cents reported in the prior-year quarter.
Owing to the seasonality of its tax business, H&R Block typically reports loss in the third quarter. Results were affected by the decline in revenues during the quarter.
Operational Performance
H&R Block reported revenues of $451.9 million in the fiscal third quarter, down 4.8% year over year. The fall was primarily due to decline in client volumes in the Assisted and DIY tax preparation businesses resulting from the delay in the overall tax season, and pricing impact of the early season promotions which include Free Federal 1040EZ and H&R Block More Zero. Revenues marginally beat Zacks Consensus Estimate of $451 million.
Total operating expenses declined 3% year over year to $576.7 million driven by effective cost management.
Financial Position
H&R Block exited the quarter with cash and cash equivalents of $221.2 million compared with $189.5 million as of Jan 31, 2016. Total outstanding long-term debt was approximately $2.6 billion, in line with the year-ago level.
For the year ended Jan 31, 2017, net cash used for operating activities was $1.4 billion, which was the same as the year ago period.
Share Repurchase and Dividend
The company bought back approximately 4.4 million shares in the reported quarter for $100 million, bringing the total share repurchases for fiscal 2017 to approximately 14 million shares for $317 million.
The company completed share repurchases under a $3.5 billion share repurchase program as of Aug 2015 which will run through Jun 2019. Per this program, the company repurchased approximately 70 million shares, or 25.5% of shares outstanding at the beginning of the program for an aggregate purchase price of approximately $2.3 billion.
The board of directors declared a quarterly dividend of 22 cents per share, payable on Apr 3 to shareholders on record as of Mar 14. The company has paid quarterly dividends consecutively to its shareholders since the company went public in 1962.
H&R Block, Inc. Price, Consensus and EPS Surprise
H&R Block, Inc. Price, Consensus and EPS Surprise | H&R Block, Inc. Quote
Peer Performance
Intuit Inc. (INTU - Free Report) reported adjusted earnings per share of 7 cents, which surpassed the Zacks Consensus Estimate of 6 cents.
Zacks Rank & Stocks to Consider
H&R Block presently carries a Zacks Rank #4 (Sell). A couple of better-ranked stocks in the Consumer Services Miscellaneous industry include SP Plus Corporation (SP - Free Report) and Weight Watchers International, Inc. (WTW - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
SP Plus has a long-term earnings growth expectation of 11.5% and has an average forward PE of 20.9x.
Weight Watchers has a long-term earnings growth expectation of 15% and has an average forward PE of 14.1x.
8 Stocks with Huge Profit Potential
Just released: Driverless Cars: Your Roadmap to Mega-Profits Today. In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>