Investors Want a Lot From H&R Block, Inc. (HRB)’s Biggest Quarter

On Wednesday, H&R Block, Inc. (NYSE:HRB) will release its latest quarterly results. With the tax-preparation giant doing most of its business between early February and mid-April, this quarter is always the most important one for the company, and investors already have high expectations for the company.

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

One thing that H&R Block, Inc. (NYSE:HRB) always has going in its favor is the complexity of the tax code. With new tax increases having taken effect at the beginning of 2013, the company can expect even more confusion among taxpayers during next year’s tax season, pointing to further growth potential ahead. 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 quarterly report.

Stats on H&R Block

Analyst EPS Estimate $2.61
Change From Year-Ago EPS 28%
Revenue Estimate $2.27 billion
Change From Year-Ago Revenue 13.3%
Earnings Beats in Past 4 Quarters 2

Source: Yahoo! Finance.

Can H&R Block knock its earnings out of the park this quarter?
Analysts have gotten a bit more enthusiastic about H&R Block’s earnings in recent months, raising their estimates for the April quarter by $0.03 per share and increase their views on fiscal 2014 by a penny per share. But the stock has already gotten a head start on the celebration, rising 19% since early March.

Much of those gains came right after H&R Block, Inc. (NYSE:HRB)’s earnings report three months ago, in which the company gave some positive guidance for the April quarter. Although the company reported a much wider-than-expected loss in its fiscal third quarter, CEO Bill Cobb projected tax-filing growth of 1% to 2% and said that H&R Block, Inc. (NYSE:HRB) was winning the competitive battle. Although early tax filings were down because of IRS delays stemming from the late passage of the fiscal-cliff compromise, expected overall growth was good news for the company.

But then, H&R Block ran into trouble with its software. The IRS said that a limited number of software company products failed to provide for the correct treatment of the American Opportunity educational tax credit, forcing an estimated 660,000 taxpayers to have to wait an additional six weeks for their refunds, and H&R Block, Inc. (NYSE:HRB) had been informing its customers about the problems. Intuit Inc. (NASDAQ:INTU) already has a commanding lead over H&R Block with Intuit’s TurboTax software, so H&R Block’s slip-up likely didn’t add much to Intuit’s dominance. But even Blucora Inc (NASDAQ:BCOR)‘s TaxAct software might well benefit from the issue, forcing H&R Block to rely even more on its bricks-and-mortar stores in order to keep its sales up.