H&R Block Drops After 1Q Revenue Miss

Shares of H&R Block are down by over 2% in pre-market trading on Wednesday, after it missed 1Q revenues yesterday. Shares were also down around 1.4% in the extended trading on Tuesday. Revenue of $601 million missed the Street estimates of $617 million. Meanwhile, 1Q earnings of $0.55 topped analysts’ expectations of $0.50.

Despite lagging revenue estimates, H&R Block’s (HRB) revenues soared 299.7% 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. Earnings of $0.55 also surged 176.4% year-over-year from a year-ago quarter’s loss of $0.66 per share. The tax-related service provider ended 1Q with a total U.S. 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 stated 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).” He maintained a Hold rating and stated 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 U.S. 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 $19.6 implies upside potential of 34% to current levels. Shares were down over 37% year-to-date.