S&P revises H&R Block to negative

S&P said it revised its outlook on H&R Block Inc. to negative from stable.

At the same time the agency affirmed all ratings on the company, including the BBB corporate credit rating and A-2 short term rating.

"The negative outlook reflects our downward revision to our performance forecast because of Block's weaker-than-anticipated earnings for the 2016 tax year, and our belief that the increasingly competitive tax preparation industry, as well as continuous shift in the industry from assisted tax filing to DIY services, will continue to weigh on the company's performance, leading to only modest profit growth during the 2017 tax season," S&P credit analyst Mariola Borysiak said in a news release.

"The ratings affirmation incorporates our view of the company's strong market position in the retail tax preparation services segment, its well-recognized brand, above-average operating margins, good cash flow generation capabilities, and strong credit metrics."

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