H&R Block stock jumps on higher revenues

Shares of Kansas City-based H&R Block Inc. rose the most Tuesday morning among stocks in the Standard & Poor’s 500 Index before trimming gains later in the day.

Investors reacted to news late Monday that the biggest U.S. tax preparer had posted an increase in its revenues for a third straight year in fiscal 2015.

The shares advanced nearly 4.8 percent early but settled at $31.96, up 71 cents or 2.27 percent at the close of trading. Its finish still was 9th best among the S&P 500 companies.

Revenue for the fiscal year ended April 30 rose 1.8 percent to $3.1 billion, driven by price increases and stronger sales of do-it-yourself tax-preparation products, the company said Monday. Net income for the 12-month period fell 2.6 percent to $487 million, or $1.75 a share, from $500 million, or $1.81, a year earlier. The firm didn’t break out results for the fourth quarter.

“Our DIY products had a very strong year, increasing revenues, return counts, and market share,” Chief Executive Officer Bill Cobb said Monday in a conference call with analysts. “Considering the market pressure placed by our top competitor, who gave away certain products for free, I’m very pleased with our revenue and volume share gains.”

Total filings increased less than 1 percent amid challenges and taxpayer confusion tied to the first year implementation of the Affordable Care Act, Cobb said. The tax season ended with 16 percent of the company’s customers affected by the health-care law, more than H&R block anticipated, he said.

“The vast majority of our clients who were impacted either paid a penalty or claimed an exemption,” said Cobb, 58. “The average penalty was $178, which was much higher than the $95 many taxpayers expected.”

This story was originally published June 9, 2015 at 11:00 AM with the headline "H&R Block stock jumps on higher revenues."