When you think of the poster children for seasonality, you might drum up regional amusement-park operators like Cedar Fair
The company even ends its fiscal year in April, assuring investors who slept through the first three quarters a robust kick into the close as tax filers pile in before the April 15 deadline. Sure, it has tried to be an all-season player. Remember when the H&R Block owned the CompuServe online service?
So when a company that has posted a modest loss in every recent July quarter reports a profit -- as Block did last night -- now, that's a Blockbuster. But before you start thinking we've become a country of procrastinators opting for filing extensions, rest easy. The explanation hits a lot closer to home.
Of the company's $494.8 million first-quarter revenue, $302.9 million came from the mortgage business. Originating new home loans has proven to be a fantastic business in this low-rate environment. Between the demand for mortgages and higher home prices, the company saw a 57% increase in new loans.
While a profit of $0.06 a share isn't overwhelming in itself, the fact that Block is in the black is significant. The quarter has the company kicking off the fiscal year with a healthy head start over previous years. Block is now looking to grow earnings by 13% to 18% this year.
So while our own vibrant Tax Center suffers through seasonal withdrawal, Block continues to make headway in shaking that seasonal tag. Will quarterly losses be a thing of the past for the company during these non-peak quarters? Finicky and cyclical a beast as real estate can be, we wouldn't bet the house on it.
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