CHICAGO (AP) — Shares of H&R Block Inc. climbed higher Wednesday after analysts raised their earnings estimates for the company based on its fiscal fourth-quarter earnings report a day earlier.
THE SPARK: The Kansas City, Mo., company reported results roughly in line with expectations and above some analysts' estimates, even though both earnings and revenue fell slightly.
Block said it had gained market share and reassured investors that there should be no further consequences from an April agreement with the Securities and Exchange Commission settling charges that its former Option One Mortgage Corp. unit misled investors about subprime mortgage offerings.
THE BIG PICTURE: The nation's largest tax preparer appears to be on course with the strategic realignment announced in April by CEO Bill Cobb to focus more on its core business. The declines were attributed largely to severance expenses and the costs of a promotion in which it gave free refund advances to customers using its prepaid debit cards, boosting the number of cards.
THE ANALYSIS: In the absence of guidance from Block, analysts Alexander Paris of Barrington Research and Scott Schneeberger of Oppenheimer & Co. cited the stock's current discounted value and the absence of negative news in boosting their earnings estimates for the 2013 fiscal year.
SHARE ACTION: Initially rose 6 percent before settling back and were trading up 40 cents, or 2.7 percent, at $15.49 in the late morning. The stock price is virtually unchanged from a year ago.