Can this Tax Services Company Breakout on Earnings?

Photo Credit: 401(K) 2012

H&R Block, Inc. (HRB) Consumer Discretionary - Diversified Consumer Services | Reports June 9, After Market Closes

Key Takeaways

• The Estimize consensus is calling for earnings per share of $3.14 on $2.3 billion in revenue, 5 cents higher than Wall Street on the bottom line and $15 million on the top
• The first quarter is always the most profitable for H&R Block because it encompasses most of tax season
• Intuit’s impressive report for the quarter sets the stage for H&R Block to exceed expectations this Thursday
• What are you expecting for HRB? Get your estimate in here!

With the US tax filing deadline falling on April 15, the first quarter is one of the most profitable for H&R Block, one of the country’s largest tax preparation companies. After missing big in fiscal Q3 and Q4, the company is expected to rebound this quarter, attributing recent successes to a new, revamped pricing strategy, digital do-it-yourself (DIY) monetization, and franchise acquisition impacts.

The Estimize consensus is calling for earnings per share of $3.14 on $2.3 billion in revenue, 5 cents higher than Wall Street on the bottom line and $15 million on the top. Compared to a year earlier this represents a projected 16% increase in earnings with sales expected to remain relatively flat. The stock is down 33.3% in the past 12 months and typically doesn’t react to an earnings report, good or bad. 

Intuit, the makers of Turbotax, H&R Block’s Primary tax software competitor, has been working feverishly to retain market share. In January of 2015, H&R Block started a campaign offering their Deluxe + State desktop software free to basic or deluxe Turbotax software holders. Turbotax users were being charged a $40 upgrade fee, as the products they relied on would require an upgrade to carry out their taxes. In addition, switching to the Block would give users a 5% bonus with their federal refund if the funds were used via e-gift cards.

Intuit has already reported impressive numbers for the quarter, beating on both the top and bottom-line. Investors will be looking to see who the winner of this tax season was when H&R Block reports on Thursday.