Popular tax specialist H&R Block (HRB) reported earnings before the market open with solid results. HRB reported a triple play, raising guidance and beating EPS estimates by 14 cents. If there’s ever a quarter where HRB should beat estimates, it’s this one as it’s also the only quarter of the year where the company typically reports a profit. Revenues also came in above estimates by $16.79 million but were down 2.5% YoY.  Additionally, the company announced the acquisition of Wave Financial, a Canadian company providing financial software for small businesses. The stock has been fairly volatile in response to these earnings as it briefly traded 2% lower in the pre-market but since the open has been much stronger. As of this writing, HRB is up 2.45%. While well off of the pre-market low, it is also 4.75% off of its intraday’s high of $29.29. Despite this wide intraday range, the stock is currently sitting at the upper end of the past month’s range with the next resistance level to watch being the December 2018 highs right above $28.

HRB has typically not been the best stock on earnings as the company has only beaten estimates for EPS and sales 56% and 50% of the time, respectively.  This quarter’s raised guidance is also a bit unusual for the stock. In the past twenty years, HRB has only seen five other quarters with raised guidance (each one was also a triple play) with the last one occurring over a decade ago in the Q2 2008 report. The quarter following each of these triple plays has usually seen solid performance with 2002 being the only year that HRB saw significant weakness in the quarter following its triple play. On the other hand, six months to a year after a triple play has been a weaker period for HRB.  The stock has averaged a decline for both periods and was only positive once a year after its triple play. Our Earnings Explorer is just one of many interactive tools we offer that allow clients to perform analysis like this one on HRB.  To access these tools, start a two-week free trial to Bespoke Institutional.

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