We expect H&R Block Inc. HRB to beat expectations when it reports fiscal third-quarter 2015 results on Mar 4 after the market closes.
Why a Likely Positive Surprise?
Our proven model shows that H&R Block has the right combination of two key ingredients.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +103.57%. This is a meaningful and leading indicator of a likely positive earnings surprise for the company.
Zacks Rank: H&R Block carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank of #1, 2 and 3 have a significantly higher chance of beating earnings.
The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
What is Driving Better-Than-Expected Earnings?
The tax preparer is set to benefit from the Affordable Care Act (ACA) implementation effective Jan 1, 2014. As per ACA, all Americans should either have health insurance in 2014 or pay a penalty through this year’s tax return.
The company also made several enhancements in its online digital tax software focusing on improving monetization and conversion. This category is also expected to benefit from the migration of pen and paper filers and add to the earnings performance in the to-be reported quarter.
The increased usage of H&R Block Prepaid MasterCard is also expected to boost its top line.
Other Stocks to Consider
Here are some other companies you may want to consider as these too have the right combination of elements to post an earnings beat this quarter:
Boyd Gaming Corporation BYD, Earnings ESP of +11.11% and a Zacks Rank #2 (Buy).
Brunswick Corporation BC, Earnings ESP of +4.92% and a Zacks Rank #3.
AMC Networks Inc. AMCX, Earnings ESP of +1.42% and a Zacks Rank #3.
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