Stock Story -
What Happened: Shares of tax preparation company H&R Block (NYSE:HRB) jumped 18.5% in the morning session after the company reported second-quarter earnings results. 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 includes 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.
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What is the market telling us: H&R Block’s shares are not very volatile than the market average and over the last year have had only a move greater than 5%. Moves this big are very rare for H&R Block and that is indicating to us that this news had a significant impact on the market’s perception of the business.
The biggest move we wrote about over the last year was 3 months ago, when the stock gained 9.2% on the news that the company reported first-quarter earnings results. H&R Block beat analysts' revenue and EPS expectations this quarter, driven by better-than-expected pricing and volumes in its assisted tax preparation business.
On the other hand, its Wave Financial revenue missed; this is a tiny segment for the company but is key for diversifying its revenue away from taxes and becoming a less seasonal business. Zooming out, we think this was still a decent quarter, showing that the company is staying on track.
H&R Block is up 37.1% since the beginning of the year, and at $67.25 per share, has set a new 52-week high. Investors who bought $1,000 worth of H&R Block’s shares 5 years ago would now be looking at an investment worth $2,438.
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