H&R Block's

(HRB) - Get Report

low-multiple shares cheapened Wednesday as investors tried to digest its explanation for a wide first-quarter earnings miss.

The company, which is famous for doing tax returns but also derives a big slug of earnings lending money for homes, posted an unexpectedly yawning loss of $44.1 million, or 26 cents a share, for the first quarter ended July 31. Analysts surveyed by Thomson First Call were forecasting a loss of 6 cents a share in the quarter.

H&R Block said rising interest rates pressured its lending spread in the quarter, something that will continue in the current quarter before improving in the fiscal year's back half. Even still, the stock was down $3.53, or 6.8%, to $51.23, about 12 times the high end of its forward earnings guidance.

"The first-quarter loss is in line with our internal expectations, and consistent with our annual earnings guidance range of $4 to $4.25 per share," the company said. "Our mortgage business is on track to meet our expectations for the year." The company is supposed to earn $4.06 a share in the year, according to Thomson First Call.

The company continues to do good business drumming up mortgage volume, with overall loan production coming in at $6.8 billion in the quarter, up 28.4% from a year ago, although its retail unit saw originations fall 7.8% from a year ago. More applications, more closures and an increase in the average loan size boosted overall volume and contributed to the growth.