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Should You Discard H&R Block (HRB) From Portfolio Now?
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On Jun 14, 2016, we issued an updated research report on H&R Block Inc. (HRB - Free Report) .
H&R Block delivered earnings that surpassed the Zacks Consensus Estimate but decreased 18% year over year due to lower revenues and higher expenses. Being a tax preparer, the company earns most of its revenues from January through April of each year as most of the clients file their tax returns during that period.
Nonetheless, management stated that the company’s performance was not as per expectation. Also, due to early season client losses, the company did not benefit from the Accountable Care Act (ACA) as expected. This in turn affected ACA-related volumes in fiscal 2016. However, there was an increase in the number of clients completing the premium tax credit reconciliation and the company believes that it will witness growth over time.
Though H&R Block divested is bank unit H&R Block Bank to BofI Federal Bank, a unit of BofI Holding, Inc to focus on its core tax preparation business, the divestment weighed on its fiscal 2016 revenues by 1%. Also, adjusted EBITDA margin declined 100 basis points due to the divestiture.
The company witnessed the number of returns declining 2.6% resulting in 1% loss of share in fiscal 2016 in its do-it-yourself category. However, average revenue per client in DIY improved on better pricing, product enhancement and improved monetization. H&R Block also expects its assisted category to grow moderately and the digital category to outperform industry growth. To that end, H&R Block launched the brand Block Advisors and expects to expand the business to over 350 locations in fiscal 2017.
Additionally, the board of directors of H&R Block approved a 10% increase in its dividend. The company’s dividend yield of 3.71% betters the industry average of 2.5%. The company also boasts a track record of 215 straight quarters of dividend payment. Moreover, the company continually engages in share buyback. With 54.9 million shares bought back in fiscal 2016, shares repurchased presently represent 20% of its total shares outstanding.
H&R Block presently carries a Zacks Rank #4 (Sell). Though we prefer to avoid H&R Block for now, some better-ranked miscellaneous consumer service providers are Rent-A-Center, Inc. and Weight Watchers International, Inc. (WTW - Free Report) . Both these stocks sport a Zacks Rank #1 (Strong Buy).
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Should You Discard H&R Block (HRB) From Portfolio Now?
On Jun 14, 2016, we issued an updated research report on H&R Block Inc. (HRB - Free Report) .
H&R Block delivered earnings that surpassed the Zacks Consensus Estimate but decreased 18% year over year due to lower revenues and higher expenses. Being a tax preparer, the company earns most of its revenues from January through April of each year as most of the clients file their tax returns during that period.
Nonetheless, management stated that the company’s performance was not as per expectation. Also, due to early season client losses, the company did not benefit from the Accountable Care Act (ACA) as expected. This in turn affected ACA-related volumes in fiscal 2016. However, there was an increase in the number of clients completing the premium tax credit reconciliation and the company believes that it will witness growth over time.
Though H&R Block divested is bank unit H&R Block Bank to BofI Federal Bank, a unit of BofI Holding, Inc to focus on its core tax preparation business, the divestment weighed on its fiscal 2016 revenues by 1%. Also, adjusted EBITDA margin declined 100 basis points due to the divestiture.
The company witnessed the number of returns declining 2.6% resulting in 1% loss of share in fiscal 2016 in its do-it-yourself category. However, average revenue per client in DIY improved on better pricing, product enhancement and improved monetization. H&R Block also expects its assisted category to grow moderately and the digital category to outperform industry growth. To that end, H&R Block launched the brand Block Advisors and expects to expand the business to over 350 locations in fiscal 2017.
Additionally, the board of directors of H&R Block approved a 10% increase in its dividend. The company’s dividend yield of 3.71% betters the industry average of 2.5%. The company also boasts a track record of 215 straight quarters of dividend payment. Moreover, the company continually engages in share buyback. With 54.9 million shares bought back in fiscal 2016, shares repurchased presently represent 20% of its total shares outstanding.
H&R Block presently carries a Zacks Rank #4 (Sell). Though we prefer to avoid H&R Block for now, some better-ranked miscellaneous consumer service providers are Rent-A-Center, Inc. and Weight Watchers International, Inc. (WTW - Free Report) . Both these stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>