Please ensure Javascript is enabled for purposes of website accessibility

Here’s Why H&R Block Is Soaring Today

By Matthew Frankel, CFP® – Mar 7, 2018 at 11:01AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

H&R Block reported better-than-expected revenue, but more recent results indicate that 2018 could be a great year for the tax preparer.

What happened

Tax-preparation company H&R Block (HRB 0.61%) reported that its 2018 tax season got off to a strong start. February, March, and April are H&R Block's busiest time of year, so shareholders are encouraged that things are looking good so far.

H&R Block filed 6.41 million tax returns in its offices through the end of February, a modest 0.7% year-over-year increase. The real boost was in its do-it-yourself software, which filed 3.64 million returns, an increase of 8.2%. In total, the company prepared 3.4% more tax returns through the end of February than it did last year.

IRS tax forms and a pencil on top of $100 bills.

Image Source: Getty Images.

Additionally, H&R Block reported $488 million in revenue, which handily surpassed analysts' expectations of $459 million, although earnings came in a little short.

As of 10:45 a.m. EST on the day following the announcement, shares were up by approximately 12%.

So what

This is especially good news for investors, considering that last year's tax season wasn't quite as good. A year ago, H&R Block's filings declined by 7% from the previous year.

It's also worth noting that the company cited its no-fee, interest-free refund-anticipation loan program, offered in partnership with online-based bank BofI Holding (AX 1.29%), as one of the reasons for its continued success in its in-office business.

Now what

To be clear, this data only includes the first month or so of tax season, so there's no guarantee that H&R Block's year-over-year growth will be as promising as it appears now. Having said that, I think this is a good sign for H&R Block and its partners that 2018 could be a strong year.

Matthew Frankel has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends BofI Holding. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.