H&R Block Easily Tops Estimates

H&R Block (HRB Quote) easily beat analysts' third-quarter earnings estimates as the company's tax preparation and mortgage business segments posted double-digit increases in revenue.

For the third quarter ended Jan. 31, 2002, the company earned $29.6 million, or 16 cents a share, up from $4.5 million, or 2 cents a share, in the same period a year ago. According to First Call, analysts were expecting a profit of 9 cents.

Revenue for the third quarter rose 11% to $728 million from $656 million in the 2000 third quarter.

"We had a great start to the tax season and an outstanding third quarter," the company said in a press release. "We saw growth in the number of tax clients that we served in January, and our clients' tax returns were more complex due to changes in the tax laws. It's difficult to fully predict results for the entire tax season based on early season filings, but overall trends indicate that we're on track with previously announced growth targets for our U.S. tax operations."

H&R Block is now projecting full-year earnings of $2.20 to $2.30 a share, while the consensus estimate stands at $2.25. The company also expects overall revenue growth to be within its target range of 10% to 15% for the year. The company makes most of its yearly profits in the fiscal fourth quarter, which ends in April.

In November, the company raised its earnings guidance for fiscal 2002 to between $2.15 and $2.25 a share. At the time, Wall Street was looking for $2.06.

The company's U.S. tax operations reported quarterly revenue of $379.2 million, up 17.8% from the same period a year ago. Mortgage operations, which primarily include Option One Mortgage and H&R Block Mortgage, posted revenue that rose 57.4% to $179.8 million.

Shares of H&R Block closed up 19 cents, or 0.4%, at $50.25. Since October, the stock has surged 54%.