Tuesday, March 2, 2021

An AIM Small Cap Equity Holding: Blucora, Inc. (BCOR, $17.22): “Tax Away with Blucora” by: Andriy Tykhonov, AIM Student at Marquette University

 Blucora, Inc. (BCOR, $17.22): “Tax Away with Blucora”

By: Andriy Tykhonov, AIM Student at Marquette University

Disclosure: The AIM Equity Fund currently holds this position. This article was written by myself, and it expresses my own opinions. I am not receiving compensation for it and I have no business relationship with any company whose stock is mentioned in this article.


• Blucora, Inc. (NASDAQ:BCOR) provides technology-enabled financial solutions to customers with small businesses, consumers, and tax professionals. The firm operates through two segments, Wealth Management which operates through Avantax that provides tax solutions to professionals in the wealth management industry. Tax Preparations focuses on delivering digital tax solutions to small business owners. Blucora was founded in 1996 and is headquartered in Irving, TX.

• In the 3rd Quarter, Blucora reported that advisory assets increased 23% year-over-year, resulting from the acquisition of HKFS.

• Blucora TaxAct business partnered with TaxDome to improve their client’s experience, which will allow them to access all-in-one solution for tax practices.

• TaxAct launch of TaxAct Xpert Help for the 2021 tax season to provide unlimited, on-demand support from tax professionals.

Key points: Throughout 2020 Blucora, like the rest of the market, has been influenced by the COVID-19 pandemic. The firm has had negative net income throughout 2020 due to extra costs on tax services caused by the tax extension. A similar trend will follow in 2021 since the pandemic is still not under control, which will result in extra costs from BCOR. Throughout the losses, the company has been improving services that they offer and introducing new ones. On January 20th, Blucora introduced a partnership between TaxAct, their Tax Preparations business, and TaxDome. The reason for the partnership was to provide online services to their clients quickly and effectively during these uncertain times. The service allows customers to access their account for all-in-one solutions to manage their tax practices, including practice management, E-signature, customizable website, secure file storage, CRM, client portal, and a mobile app.

With the acquisition of HKFS, Blucora has been growing its advisory assets, which have increased 23% over the last year. Through the acquisition, they have been able to get into a new market and renamed it the Avantax Planning Partners, which offers investment advice. TaxAct on January 25th has also launched an advising service called TaxAct Xpert Help for regular consumers and small businesses. This service provides one-on-one support from professional CPAs and tax experts every single day. With this new introduction, Blucora has an opportunity to grow its regular consumer customer base. With these new introductions to their businesses, BCOR helps consumers, small businesses, and tax professionals achieve their financial goals online through the pandemic.

What has the stock done lately?

Throughout the past month, Blucora's stock price has increased by around 6.96%, from $16.09 to $17.21. The stock has been pretty constant, with a high of $17.70 on February 2nd and a low of $16.08 on January 13th, which shows a difference of 10.07%. The company has been following a similar trend as their comparable index. Due to consumers receiving stimulus checks from the government, there has been an increase in the amount of money invested in the market. Blucora competitors such as H&R Block, Inc. and LPL Financial Holdings Inc. have been outperforming them by 20.54% and 11.10%, respectively. 

Past Year Performance: In the last year, Blucora has decreased in value by 22.34%. The 52-week high was at $22.88 and as low at $8.82, which shows this securities volatility. The reason for a considerable fall in March and April was due to COVID-19, which followed a similar trend to the market. Blucora has underperformed to the Russel 2000, which has grown by around 37.04% in the past year.

Source: FactSet

My Takeaway

In the past three months, Blucora has grown by 42.47% due to them beating their Q3 expectations and introducing new services such as TaxAct Xpert Help. However, in the past month, the stock grew up by 6.96%, showing slower growth than their top competitors mentioned above. BCRO has not broken its 52-week high of $22.88, meaning they still have excellent growth potential. The firm scheduled a Q4 earnings release for February 17th, 2021, showing if TaxAct Xpert Help and the partnership with TaxDome prove to generate revenue. With the 2021 tax season about to begin, Blucora should capitalize on their service and generate extra revenue; therefore, the recommendation is hold.

Source: FactSet