Earnings Preview: H&R Block

H&R Block (HRB) is expected to report Q2 earnings after market close Monday Dec. 8, with a conference call scheduled for 5:00 pm ET.

Guidance

Analysts are looking for a loss of (40c) on revenue of $397.28M. The consensus range is (46c)-(34c) for EPS, and revenue of $359.37M-$444.86M, according to First Call.

Analyst Views

FTN Midwest analyst Kartik Mehta said that cost cuts, the ability to take market share in a fragmented market and an ongoing buyback should contribute to earnings growth. From a macro standpoint, Mehta states, H&R Block, whose tax services business contributed about 70% of FY08 revenue, has a built-in demand that is not going away in 2009.

Additionally, UBS analyst Andrew Fones believes the tax market could get a boost from an additional economic stimulus package in the next few months; changes to the tax could could also drive additional taxpayers to seek professional help with their tax returns.

Analysts believe H&R Block, up 8% for the year, is a good bet for investors because of its ability to raise prices and its cheap valuation.