What Happened?
Shares of tax preparation company H&R Block (NYSE: HRB) fell 6% in the morning session after the company reported mixed second-quarter results, as an earnings miss and weaker-than-expected guidance for the upcoming fiscal year overshadowed a slight revenue beat. The tax preparation company posted adjusted earnings per share of $2.27, well below analyst expectations of $2.83. Although revenue came in slightly ahead of forecasts at $1.11 billion, the focus remained on profitability. The earnings miss was partly due to a one-time tax benefit of $0.50 per share being pushed to the next quarter. Looking ahead, H &R Block's earnings forecast for fiscal 2026 of $4.85 to $5.00 per share also fell short of consensus estimates.
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What Is The Market Telling Us
H&R Block’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 12 months ago when the stock gained 18.5% on the news that the company reported strong second-quarter earnings. H&R Block provided optimistic full-year revenue and earnings guidance, which blew past analysts' expectations. Revenue, adjusted EBITDA, and EPS also came in higher than Wall Street's estimates during the quarter. Notably, the guidance included expectations for industry growth to fall within historical trends (about 1%) and for market share to be maintained in the tax business. Overall, this was a solid quarter with some key areas of upside.
H&R Block is down 7.2% since the beginning of the year, and at $49.27 per share, it is trading 26% below its 52-week high of $66.60 from August 2024. Investors who bought $1,000 worth of H&R Block’s shares 5 years ago would now be looking at an investment worth $3,311.
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