H&R Block results beat estimates, stock soars

NEW YORK (Reuters) - Tax preparer H&R Block Inc (HRB.N: Quote, Profile, Research, Stock Buzz) said on Monday it swung to a quarterly profit from a loss, beating estimates and driving the stock 6.6 percent higher, as revenue rose 11 percent.

The company, rejuvenated by the sale of its Option One mortgage servicing business to billionaire Wilbur Ross in April, forecast a full-year profit that was also higher than the market was expecting.

"The balance sheet is significantly better year over year and I suspect it will be much better next year now that we have the subprime mess behind the company," said Alex Paris Jr, an analyst with Barrington Research in Chicago.

Traders had positioned themselves for a grim set of numbers earlier this month, driving the stock 10 percent lower on June 20. In particular, they expressed concern about the company's guidance, noting that cash-strapped households may start doing their own taxes rather than pay H&R Block to do them.

Paris, who does not own H&R Block shares, said the results were excellent and that concerns H&R Block's business would drop off in an economic downturn were unfounded.

"We've had economic slowdowns in the past. The professional filing of taxes tends to be recession resistant," he said, noting that many filers use professional tax preparers in order to access their refunds more quickly.

Paris is among the top rated at forecasting the company's earnings and stock moves as tracked by research firm Starmine, a Thompson Reuters company.

The company reported a fiscal fourth-quarter net profit of $543.6 million, or $1.66 per share, compared with a loss of $85.6 million, or 26 cents per share, in the same quarter a year ago.

Earnings from continuing operations rose 17 percent to $2.11 per share, beating analysts' estimates of $2.03 per share, according to Reuters Estimates.