For Immediate Release
Chicago, IL – March 2, 2010 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: H&R Block Inc. (HRB), Intuit Inc. (INTU), RadioShack Corp. (RSH), Best Buy Co. Inc. (BBY) and Wal-Mart Stores Inc. (WMT).
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Here are highlights from Monday’s Analyst Blog:
H&R Block to Miss Guidance
H&R Block Inc. (HRB) has recently announced that it would not be able to meet its previously announced fiscal 2010 guidance as it is preparing fewer tax returns than it had previously expected.
As per H&R Block’s previous guidance, the company expected to report earnings of $1.60–$1.80 a share from continuing operations. This compares to the Zacks Consensus Estimate of $1.61 per share.
However, following this weaker outlook announcement, we expect a large number of analysts to revise their estimates for the fourth quarter (ending April 30) and the full fiscal year 2010 downward in the next couple of days.
In its preliminary tax season results for the interim period through Feb 15, 2010, the company said its same-office tax returns prepared in retail operations dropped 5.6% from the prior-year period, while the total number of tax returns prepared decreased 6.3% year-over-year.
Total retail tax returns prepared year-to-date fell 8.2% even though the net average retail fee per tax return rose 1.9%. In addition, H&R Block’s online tax return services’ growth of 3.1% was more than offset by a 7.6% drop in its software-based tax return programs.
Though H&R Block is the nation’s largest tax preparer, we think that this interim result clearly shows the erosion of its market share to its competitors, particularly the online preparers.
The economic weakness and the high level of unemployment are resulting in a continued shift from assisted tax preparation to the cheaper do-it-yourself mode, primarily driven by the growth in digital online space.
The company’s primary rival in the online space is Intuit Inc.’s (INTU) TurboTax tax-preparation software. Intuit raised its full year guidance and said that sales of its TurboTax is gaining significant momentum and would surpass its previous expectations.
RadioShack Downed to Neutral
We downgrade our recommendation for RadioShack Corp. (RSH) to Neutral, due to our concern regarding future sales potential of the company’s non-wireless product categories. RadioShack’s fourth quarter 2009 financial results were mostly in line with the Zacks Consensus Estimates. But that was mainly due to significant growth of the wireless businesses.
In the fourth quarter, sales of its TV Converter box was just $13.1 million compared to $54.4 million in the year-ago quarter. Accessory sales were down 19.6% due to a huge sales decline in digital-to-analog TV converter boxes, imaging accessories and video game accessories.
Modern Homes sales declined 8.8%, Personal Electronics sales decline 12.4%, Power sales declined 11.2%, and Technical sales declined 4%. Kiosks segment revenue declined 15.3% year-over-year to $67.2 million. This was primarily due to fewer kiosk locations and the closure of Sprint-branded kiosks in August 2009.
We believe RadioShack may face serious challenges from more diversified stores like Best Buy Co. Inc. (BBY) and Wal-Mart Stores Inc. (WMT) unless it revamps its non-wireless segment. The non-wireless segment has underperformed for the second quarter in a row.
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