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Why H&R Block Stock Just Tanked

By Rich Smith - Jun 16, 2021 at 3:28PM

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This isn't how earnings beats usually work.

What happened

Shares of tax advisory company H&R Block (HRB 3.13%) are down 6.8% as of 2:55 p.m. EDT, despite the company reporting an earnings beat after close of trading yesterday.

Analysts had forecast that H&R Block would earn $5.13 per share in its fiscal fourth quarter 2021 (pro forma), but in fact, the company says its adjusted profit was $5.16. On the top line, however, the company's $2.33 billion in Q4 revenue fell just short of analysts' expected $2.35 billion.  

White arrow declining sharply atop a stock tickertape display bathed in red

Image source: Getty Images.

So what

Over the course of the whole year, and "including total tax season performance through the [government-extended] May 17, 2021 filing deadline," management says that it "substantially exceeded its original fiscal 2021 revenue and earnings outlook" for the year.

Although analysts were disappointed, H&R Block notes that its revenue for all of fiscal 2021 grew 29% year over year to $3.4 billion, and its net income for the year was a robust $3.11 per share -- more than 100 times the $0.03 per share in profit booked in fiscal 2020.

Now what

Management did not give guidance for what it expects to earn in fiscal 2022, however, a fact that may have upset investors today -- especially with analysts warning that this year won't be as rich as last for H&R Block. According to published estimates, Wall Street is looking for profits to decline to $3.08 this year, and for sales to slip back below $3.4 billion.

Fiscal 2022 might be a bit farther off than you expect. Management says it is changing its fiscal year-end date from April 30 to June 30 in order to "allow for better alignment of complete tax seasons in comparable fiscal periods."

Translation: Expect a new and updated fiscal 2021 earnings report to follow this last one, just three months from now.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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