The 10-second takeaway
For the quarter ended Jan. 31 (Q3), H&R Block missed estimates on revenues and missed expectations on earnings per share.
Compared to the prior-year quarter, revenue dropped significantly and GAAP loss per share contracted.
Margins increased across the board.
H&R Block reported revenue of $663.3 million. The five analysts polled by S&P Capital IQ expected a top line of $722.5 million on the same basis. GAAP reported sales were 17% lower than the prior-year quarter's $795.4 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at -$0.01. The seven earnings estimates compiled by S&P Capital IQ predicted $0.09 per share. GAAP EPS were -$0.01 for Q3 compared to -$0.04 per share for the prior-year quarter.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 37.6%, 1,750 basis points better than the prior-year quarter. Operating margin was 3.0%, 960 basis points better than the prior-year quarter. Net margin was -0.5%, 110 basis points better than the prior-year quarter.
Next quarter's average estimate for revenue is $2.15 billion. On the bottom line, the average EPS estimate is $2.20.
Next year's average estimate for revenue is $3.29 billion. The average EPS estimate is $1.48.
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 379 members out of 560 rating the stock outperform, and 181 members rating it underperform. Among 174 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 91 give H&R Block a green thumbs-up, and 83 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on H&R Block is outperform, with an average price target of $19.00.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.