Story URL: http://news.medill.northwestern.edu/chicago/news.aspx?id=231316
Story Retrieval Date: 4/17/2015 11:16:21 AM CST
H&R Block Inc./ Paulo Cabral Filho - MEDILL
With results better than expected by analysts, H&R Block Inc. reported an increase of 36 percent in its fourth quarter profit, due mainly to improved return mix and pricing strategy changes in its retail locations, digital tax software product enhancement, and increased revenues from certain financial products. The stock jumped more than 4 percent.
The world’s largest consumer tax services provider, with 85 locations in Chicago, reported a net income in the quarter ended April 30 of $910 million, or $3.29 per diluted share, up from $664 million, or $2.24 per share, in the year-ago period. Analysts estimated $3.23 per share.
Revenues increased 16 percent to $2.56 million from $2.2 million.
For the fiscal year, which also ended on April 30, the company showed an increase of 5.4 percent in net income to $462 million, or $1.67 per diluted share, from $438 million, or $1.59 per share, in the prior year.
"We delivered a strong year of both revenue and earnings growth,” said H&R CEO and president Bill Cobb.
The results were positive despite a 2.6 percent decrease in the number of returns prepared by and through H&R Block. That happened due mainly to the company’s decision to discontinue its U.S.-based free federal 1040EZ promotion in practically all markets.
“Though we anticipated an overall decline in return counts, our Tax Plus strategy is working,” Cobb said, referring to the company's focus on the Tax Plus service products, which had an increase of 11.2 percent over the year. Tax Plus refers to a service package that includes preparing tax returns plus providing year-round financial products and services.
Analysts were slightly surprised by the results released, which was better than expected, and they maintained the outperform recommendation.
“The results topped our estimate consensus,” Oppenheimer & Co. analyst Scott Schneeberger wrote in a report. “With solid net revenue growth, HRB successfully executed its FY14 tax season strategy to more than offset volume declines with improved revenue per return.”
The company’s shares closed at $32.15, up $1.42 or 4.6 percent.