H&R Block (HRB 23.52, -6.08, -20.54%) has slid premarket
despite beating earnings expectations. The early weakness has pressured the stock
from its 2018 high back to its year-to-date low from early February.
The tax preparation company reported above-consensus fourth quarter earnings of $5.43/share on a 2.8% year/year increase in revenue to $2.39 bln, which was also ahead of estimates. However, the company's guidance for fiscal year 2019 was shy of market expectations. The company expects that revenue for fiscal year 2019 will be between $3.05 bln and $3.10 bln while EBITDA margin is expected between 24.0% and 26.0%, which is also below market estimates.
The company's revenue growth rate in the fourth quarter was driven by higher client volumes and higher net average charge in the U.S. tax business. The company prepared roughly 20.0 mln tax returns during the fiscal year, representing year/year growth of 2.5%. Retention in the U.S. assisted business improved but remained negative at -0.6% from -2.5% one year ago.
H&R Block's online do-it-yourself segment saw 10.3% year/year growth due to product enhancements, more effective marketing, and growth in net average charge.
Net income from continuing operations jumped 48.9% to $627 mln, due to a lower effective tax rate and an improved pretax income.
The company announced a 4.0% year/year increase to its dividend. The annual dividend now stands at $1.00/share.
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