Though there was a sequential improvement in the bottom-line performance in recent quarters, a full recovery in the near term looks far-fetched
Though there was a sequential improvement in the bottom-line performance in the trailing two quarters, which also came in about the estimates, a full recovery in the near term looks far-fetched. The sharp increase in standard deduction after the new taxation norms came into effect has created a situation where fewer customers use the company’s assisted online tax filing service, which is an emerging growth driver. Market watchers forecast a loss of $0.53 per share for the December-quarter on revenues of $465.5 million, which reflects a weaker performance compared to last year.
For the second quarter, H&R Block had reported a wider net loss, hurt mainly by higher expenses and seasonal factors. During the quarter, adjusted loss per share widened to $0.83 from $0.71 in the prior year, despite a 6% growth in revenues to $149 million.
Also see: H&R Block Q2 2019 Earnings Conference Call Transcript
Intuit (INTU), H&R Block’s main competitor, will be reporting its third-quarter numbers on May 23 after the market closes.
Goldman Sachs in its most recent research note assigned H&R Block shares a sell rating. The price target for the stock, which has earned a mixed rating in recent months, ranges from $25 to $28. It has been trading below the long-term average for quite some time, often outperforming the sector. The stock lost about 13% in the past twelve months and slipped 6% since the beginning of the year.