H&R Block reported Q3 fiscal 2026 results after the close on May 6 that directly contradict the bear thesis that has been building all month — and the stock's pre-earnings slide makes the setup all the more striking.
The headline numbers were clean beats. Adjusted EPS of $6.02 topped the $5.77 consensus estimate. Revenue of $2.398 billion cleared the $2.336 billion bar. The company also raised full-year guidance, lifting its FY2026 adjusted EPS range to $5.10–$5.20 from the prior $4.85–$5.00, and nudging its revenue outlook above $3.91 billion. On top of that, the board authorised an incremental $100 million buyback for Q4. That is a lot of good news arriving all at once — and it arrives into a stock that had already given back nearly 7% in a month, closing at $30.02 on May 5.
The short side had been building steadily going into the print. Short interest climbed roughly 13% over the past month, reaching 12.8% of the free float. That is a meaningful and growing position — one that was almost certainly wagering on the earnings miss that did not materialise. The week-on-week change was more modest, up less than 1%, suggesting the heaviest accumulation happened in April rather than the final days before the release. Days to cover based on FINRA's fortnightly data ran to 7.5 — a high hurdle. Cost to borrow, by contrast, remained low at 0.47%, down 8% on the week, and the availability picture is not stressed. Availability sits well above tight levels, meaning short sellers can still add without difficulty. The short score of 61.9 — roughly in the middle of its one-month range — reflects an elevated but not extreme short position heading into what turned out to be a positive event.
The options market told a similarly cautious pre-earnings story. The put/call ratio has tracked persistently above 1.0 for several weeks, with the latest reading of 1.09 almost exactly in line with its 20-day average of 1.09 — effectively flat and unremarkable by z-score standards. That is notable: options traders were not making a dramatic directional call into the print, neither loading up on downside nor expressing confidence in upside. The 52-week PCR range sits between 0.39 and 1.38, so current levels are in the defensive half of the range but far from the extremes. Heading into a catalyst, a neutral z-score suggests the options market was simply maintaining its habitual defensive tilt rather than adding fresh conviction either way.
The analyst picture has been fractured. Barrington Research maintained its Outperform rating and $50 price target as recently as April 27, the most recent action in the data. Goldman Sachs carries a Sell with a $32 target, set in February after it was cut from $48 in response to the weak Q2 print and below-consensus FY26 EPS guidance. With today's guidance raise lifting the midpoint above what was the Goldman target, that bear case has been directly challenged. The mean price target of $41 implies meaningful upside from the $30 close — more than 36% — though that figure aggregates targets from both the bull and bear camp. The dividend score ranks in the 94th percentile, and while the historical dividend data in the system is stale, the announced quarterly dividend of $0.42 per share confirmed this week puts yield squarely in the picture for income-oriented holders.
The prior earnings event, in February, was a jarring experience: the stock fell 10.7% the day after results and extended to a 15.7% loss over the subsequent five days. That reaction anchored the bear thesis — a high-tax-rate headwind, sub-consensus EPS guidance, and a multiple trading below its five-year average EV/EBITDA. The Q3 results on May 6 directly address those concerns. The guidance raise takes FY26 adjusted EPS above the prior FactSet consensus, the buyback authorization signals management confidence, and the revenue beat suggests the underlying tax-season business performed well.
What to watch now is whether the short community — which built a 13% float position into a beat-and-raise — moves to cover, and whether the stock can reclaim the territory it surrendered since late March.
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