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Intuit Inc. (INTU): H & R Block Inc (HRB) Earnings Face a Tough Off-Season

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H & R Block Inc (NYSE:HRB) will release its quarterly report next Tuesday, and investors have generally liked the company’s prospects, sending shares to all-time record-high levels before falling back somewhat in just the past month. Yet given the company’s seasonal business, expecting H & R Block Inc (NYSE:HRB) earnings to look good in its off-season quarters isn’t realistic, and the real goal is just to minimize the pain until next year’s tax season rolls around again.

H&R Block, Inc. (NYSE:HRB)

Obviously, a company that handles tax preparation will do most of its business when tax returns are due. Although H & R Block Inc (NYSE:HRB) theoretically could have work to do for businesses and others needing help on a quarterly basis, it primarily gets most of its revenue from traditional personal income tax returns and software, for which demand primarily comes in the month of April. With those hard truths in mind, let’s take an early look at what’s been happening with H & R Block Inc (NYSE:HRB) over the past quarter and what we’re likely to see in its report.

Stats on H&R Block

Analyst EPS Estimate ($0.37)
Year-Ago EPS ($0.38)
Revenue Estimate $98.40 million
Change From Year-Ago Revenue 2%
Earnings Beats in Past 4 Quarters 2

Source: Yahoo! Finance.

How well will H&R Block earnings hold up this quarter?
In recent months, analysts have had mixed views on H & R Block Inc (NYSE:HRB)’s earnings prospects, narrowing their loss estimates for the July quarter by $0.03 per share but cutting their views on full-year fiscal 2014 and 2015 earnings. The stock has taken the more negative view, falling more than 4% since late May.

H&R Block’s April-quarter results showed the same level of uncertainty for the company. On one hand, cost-cutting efforts paid off for the company’s bottom line, with a rise in earnings-per-share from continuing operations of $0.25. Yet the number of tax-filings H & R Block Inc (NYSE:HRB) helped with fell by 2.7%.

The longer-term threat to H&R Block comes from a broader set of alternatives for tax preparation. Rival Intuit Inc. (NASDAQ:INTU) and its TurboTax software is an industry leader, but both companies reported weaker-than-expected return-processing figures this year. Up-and-coming TaxACT software-provider Blucora Inc (NASDAQ:BCOR) has also made a splash in the industry, picking up double-digit market share and putting itself in position to challenge H&R Block’s own tax software. With a greater number of free e-filing vehicles available to millions of taxpayers, the need to visit an H&R Block specialist or to use its own proprietary tax software to gain access to the speedier refunds available from e-filed returns has diminished greatly.

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