It has been about a month since the last earnings report for H&R Block (HRB). Shares have added about 1.9% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is H&R Block due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
H&R Block Misses Q3 Estimates
H&R Block, Inc. reported disappointing third-quarter fiscal 2023 results wherein earnings and revenues missed the Zacks Consensus Estimate.
Third-quarter fiscal 2023 adjusted earnings per share of $4.20 (excluding 8 cents from non-recurring items) missed the Zacks Consensus Estimate of $4.51. However, earnings rose 2.2% on a year-over-year basis, primarily owing to fewer shares outstanding from share repurchases.
Revenues of $2.1 billion also missed the consensus estimate marginally but increased 2% year over year. The top line was positively impacted by a higher net average charge in the Assisted category.
Total operating expenses of $1.2 billion increased by 4.5%, mainly due to higher field wages and the timing of advertising.
Other Quarterly Numbers
H&R Block exited the quarter with cash and cash equivalents of $909.1 million compared with $264.5 million at the end of the prior quarter. Long-term debt and line of credit borrowings were $1.48 billion compared with $2.1 billion in the previous quarter.
H&R Block used $1.28 billion of cash in operating activities while capex was $15.2 million. HRB paid out dividends of $44.6 million in the quarter under review.
Updated 2023 Outlook
H&R Block expects revenues in the range of $3.440-$3.465 billion (prior view: $3.535-$3.585 billion). Adjusted EPS is projected to be between $3.65 and $3.80 (prior view: $3.7 and $3.95).
EBITDA is anticipated to be between $895 million and $910 million (prior view: $915 million and $950 million). The effective tax rate is still expected to be around 22%.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 9.25% due to these changes.
Currently, H&R Block has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile 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.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, H&R Block has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
H&R Block belongs to the Zacks Consumer Services - Miscellaneous industry. Another stock from the same industry, Cimpress (CMPR), has gained 20.5% over the past month. More than a month has passed since the company reported results for the quarter ended March 2023.
Cimpress reported revenues of $742.16 million in the last reported quarter, representing a year-over-year change of +12.9%. EPS of -$0.97 for the same period compares with -$2.75 a year ago.
For the current quarter, Cimpress is expected to post earnings of $0.16 per share, indicating a change of +113.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +700% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Cimpress. Also, the stock has a VGM Score of B.
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